Demand, Supply, and Equilibrium

What is the Law of Demand?

• The Law of Demand states that as the price of a good or service decreases, the quantity demanded for that good or service increases, and vice versa, assuming all other factors remain constant.

• The Law of Demand states that as the price of a good or service decreases, the quantity demanded for that good or service decreases.

• The Law of Demand states that as the price of a good or service increases, the quantity demanded for that good or service increases.

• The Law of Demand states that as the price of a good or service remains constant, the quantity demanded for that good or service remains constant.

Explain the Law of Supply.

• The Law of Supply states that as the price of a good or service increases, the quantity supplied by producers also increases.

• The Law of Supply states that as the price of a good or service decreases, the quantity supplied by producers decreases.

• The Law of Supply states that as the price of a good or service remains constant, the quantity supplied by producers increases.

• The Law of Supply states that as the price of a good or service increases, the quantity demanded by consumers decreases.

Define Market Equilibrium.

• Market equilibrium is the point where the quantity of a product demanded by consumers equals the quantity supplied by producers, resulting in a stable price.

• Market equilibrium is when supply exceeds demand resulting in a price increase.

• Market equilibrium is when there is no demand for a product.

• Market equilibrium is when demand exceeds supply resulting in a price decrease.

Name three factors that can affect demand.

• Price of the product, consumer wealth, consumer behavior

• Price of the product, consumer income, consumer preferences

List three factors that can influence supply.

• demand, competition, consumer preferences

• production costs, technology, government policies

How does an increase in consumer income affect demand?

• Consumer income and demand have a positive relationship for normal goods.

• Consumer income and demand have a negative relationship for inferior goods.

• Consumer income has no impact on demand.

• Consumer income and demand have a negative relationship for normal goods.

What happens to equilibrium price and quantity when demand increases?

• Equilibrium price decreases while quantity increases.

• Equilibrium price remains the same while quantity increases.

• Equilibrium price and quantity both decrease.

• Equilibrium price and quantity both increase.

If the cost of production rises, how does it impact the supply curve?

• The supply curve remains unchanged.

• The supply curve shifts to the left, indicating a decrease in supply.

• The supply curve shifts to the right, indicating an increase in supply.

• The supply curve becomes vertical.

Describe the concept of surplus in the context of market equilibrium.

• Surplus occurs when the quantity demanded exceeds the quantity supplied

• Surplus only occurs in a perfectly competitive market

• Surplus in the context of market equilibrium refers to the situation where the quantity supplied by producers exceeds the quantity demanded by consumers at a given price. This leads to excess supply in the market, creating a surplus.

• Surplus leads to a decrease in prices to balance the market

How do changes in technology impact supply in the market?

• Changes in technology have no impact on supply in the market.

• Changes in technology can increase supply by improving efficiency, reducing costs, and enabling the creation of new products or services.

• Changes in technology decrease supply by increasing costs and reducing efficiency.

• Changes in technology only impact demand, not supply.