Mid-Test Preparation

What is the main difference between Demand and Supply? [TWO ANSWERS]

• Demand creates a positive relationship between price and quantity while supply is the opposite

• Demand is the willingness and ability of customers to purchase a product while supply is the willingness and ability of suppliers to provide

• Demand is about desire while supply is about willingness

• Demand's POV (point of view) is the buyers, while supply's POV is suppliers or producers or businesses

Which of the following are the reasons why there is an inverse (negative) relationship between price and quantity demanded?

• The customers receive loans from the government or experience an increase in their salaries or wages.

• When the price falls, buyers' real income increases, therefore they are able to buy the product

• Supply is from the perspective of suppliers who appreciate higher prices so that they can earn more profit.

• Demand is from the perspective of buyers who appreciate lower prices

How best to describe Quantity demanded?

• The negative or inverse relationship between price and demand in a certain period of time

• The factors that affect the change in demand (other than price)

• The willingness and ability of buyers to purchase at a given price level.

• The amount of demand of a good or services at a certain price level.

Which of the following hos the most correct understanding of law of demand?

• P increases, Qd falls

• P increases, Qd increases

• P falls, Qd falls

• P increases, Qd remains the same

Substitutes and complementary (complements) products are one of the factors that affect demand. Which of the following show the best example of a change in price with substitute products based on the Law of Demand?

• When the price of Burger King falls, the demand for McDonald's decreases.

• When the price of Burger King falls, the demand for McDonald's increases.

• When the price of Burger King falls, it will not affect any other fast food restaurants demand

• When the price of Burger King increases, all fast food restaurants' demand will also decrease.

POKEMON CARDS! Was booming for a certain amount of time at SMP Xin Zhong. Many students, mainly boys, brought them to school to be traded with other students' collections. The demand for this product increased significantly during that period.

The case study above is an example of which determinant of demand?

• Income

• Habits, fashions, tastes (and trend)

• Economy

• Government policy

Why is the Demand Curve sloping down?

• To show that there are other factors that affect quantity demanded (Qd) other than price.

• To show that the price does not affect quantity demand (Qd) at all.

• To show the positive relationship between price and quantity demanded (Qd).

• To show the negative or inverse relationship between price and quantity demanded (Qd).

Based on the picture shown, the demand curve is experiencing ......

• contraction and extension

• contraction

• extension

• nothing really happens

The Qd for Coca-cola will decrease when the price increases because ....

• The consumers will then buy the substitutes instead

• The consumers will continue to buy the product because it is a basic necessity

• It will affect the supply curve which resulting in an upward sloping curve

• The consumers will then buy the complement products instead

Let's talk about Supply now. As you know, Supply is the willingness and ability of suppliers/businesses to provide goods and/or services at a given price level. Therefore, the suppliers will supply more if they can sell their products a higher level (high quantity supplied/Qs). Why is that?

• Because they can then compete with their competitors fairly

• Better profit earned

• Higher price means lower production cost

• Higher price means lower marketing budget