Supply and Demand Quiz

What is the law of demand?

• As price increases, demand increases

• As price decreases, demand decreases

• As price increases, demand decreases

• Price has no effect on demand

What is the law of supply?

• As price increases, supply increases

• As price decreases, supply increases

• As price increases, supply decreases

• Price has no effect on supply

Which of the following would likely cause a decrease in demand for a product?

• A rise in income

• A decrease in the price of a substitute good

• An increase in the price of a complementary good

• A successful advertising campaign

What happens when the quantity demanded is greater than the quantity supplied?

• Surplus

• Shortage

• Equilibrium

• Inflation

What is equilibrium price?

• The highest price the seller can charge

• The price where quantity demanded equals quantity supplied

• The lowest price the buyer is willing to pay

• A fixed price in all markets

Which factor is NOT a determinant of demand?

• Income

• Technology

• Consumer preferences

• Price of related goods

If the price of a good increases, what typically happens to the supply of that good

• Supply increases

• Supply decreases

• Supply remains unchanged

• • Supply becomes more elastic

What is a price ceiling?

• A maximum price set by the government

• A minimum price set by the government

• A voluntary price agreed upon by suppliers

• • The average price over a period of time

What is a price floor?

• The lowest price a consumer is willing to pay

• A price below which goods cannot be sold

• A voluntary price agreed upon by buyers

• • The average price over a period of time

What does it mean when demand is elastic?

• Demand changes a lot with a small price change
  

• Demand does not change much with a price change

• Supply changes a lot with a price change

• Supply does not change much with a price change