Economics: Supply and Demand

What happens to price when there is a shortage of a product?

• Price remains the same

• Price increases

• Price decreases

• Price fluctuates

Explain the concept of elasticity of demand.

• Elasticity of demand is a term used to describe the flexibility of supply chains

• Elasticity of demand refers to the ability of a product to stretch without breaking

• Elasticity of demand measures the temperature sensitivity of consumers

• The concept of elasticity of demand is a measure of how much the quantity demanded of a good changes in response to a change in its price.

How does an increase in income affect the demand curve?

• Increase in income generally shifts the demand curve to the right for normal goods and to the left for inferior goods.

• Increase in income shifts the demand curve to the right for inferior goods

• Increase in income shifts the demand curve to the left for normal goods

• Increase in income shifts the demand curve vertically

Define the law of supply.

• Producers are not influenced by price changes when determining the quantity supplied.

• The law of supply states that as the price of a good or service decreases, the quantity supplied also decreases.

• The law of supply only applies to services, not physical goods.

• As the price of a good or service increases, the quantity supplied by producers also increases.

What factors can cause a shift in the supply curve?

• Weather conditions

• Changes in production costs, technology, government policies, taxes, subsidies, and the number of suppliers.

• Changes in consumer preferences

• Global population growth

Differentiate between a change in quantity supplied and a change in supply.

• A change in quantity supplied is caused by changes in technology, while a change in supply is caused by changes in consumer preferences.

• A change in quantity supplied is a long-term adjustment, while a change in supply is a short-term response.

• A change in quantity supplied is a movement along the supply curve due to a change in price, while a change in supply is a shift of the entire supply curve due to factors other than price.

• A change in quantity supplied is a shift of the entire supply curve due to factors other than price, while a change in supply is a movement along the supply curve due to a change in price.

What is the equilibrium price and quantity in a market?

• The equilibrium price is set by the government

• The equilibrium quantity is determined by the sellers alone

• The equilibrium price and quantity in a market are determined by the intersection of the supply and demand curves.

• Equilibrium price and quantity are fixed and do not change

Discuss the impact of a price ceiling on the market.

• A price ceiling causes surplus, higher prices, and increased consumer surplus.

• A price ceiling results in decreased demand, increased prices, and improved market competition.

• A price ceiling can lead to excess demand, shortages, lower quality, black markets, and misallocation of resources.

• A price ceiling can lead to excess supply, higher quality, and efficient allocation of resources.

How does technological advancement influence supply and demand?

• Technological advancement decreases efficiency in production

• Technological advancement only affects supply, not demand

• Technological advancement has no impact on supply and demand

• Technological advancement influences supply and demand by increasing efficiency in production, creating new products or services, and changing consumer preferences.

Explain the concept of price elasticity of supply.

• Price elasticity of supply is a measure of how the quantity supplied of a good or service changes in response to a change in price.

• Price elasticity of supply is only applicable to services, not goods

• Price elasticity of supply is a term used to describe the relationship between supply and demand

• Price elasticity of supply measures the demand for a product based on its price