Understanding Supply and Demand Basics

What happens to the quantity demanded of a good when its price decreases, assuming all other factors remain constant?

• The quantity demanded decreases.

• The quantity demanded increases.

• The quantity demanded remains the same.

• The quantity demanded becomes zero.

Which of the following best describes the law of supply?

• As the price of a good increases, the quantity supplied decreases.

• As the price of a good decreases, the quantity supplied increases.

• As the price of a good increases, the quantity supplied increases.

• The price of a good does not affect the quantity supplied.

If the demand for a product increases while the supply remains constant, what is likely to happen to the equilibrium price?

• The equilibrium price will decrease.

• The equilibrium price will increase.

• The equilibrium price will remain the same.

• The equilibrium price will become zero.

Which of the following factors can cause a shift in the demand curve for a product?

• A change in the price of the product.

• A change in consumer income.

• A change in the quantity supplied.

• A change in the production technology.

What is the effect on the supply curve if there is an improvement in production technology?

• The supply curve shifts to the left.

• The supply curve shifts to the right.

• The supply curve becomes vertical.

• The supply curve remains unchanged.

Which of the following is an example of a substitute good?

• Coffee and sugar.

• Tea and coffee.

• Bread and butter.

• Cars and gasoline.

If the price of a complementary good increases, what is likely to happen to the demand for the related good?

• The demand for the related good increases.

• The demand for the related good decreases.

• The demand for the related good remains the same.

• The demand for the related good becomes zero.

What is the term used to describe the responsiveness of quantity demanded to a change in price?

• Price elasticity of supply.

• Price elasticity of demand.

• Cross elasticity of demand.

• Income elasticity of demand.

Which of the following scenarios would cause a movement along the demand curve for a product?

• A change in consumer preferences.

• A change in the price of the product.

• A change in the price of a substitute good.

• A change in consumer income.

If a product is considered a necessity, how is its demand likely to respond to a change in price?

• Demand is highly elastic.

• Demand is perfectly elastic.

• Demand is inelastic.

• Demand is perfectly inelastic.