Understanding Supply and Demand

What is the law of demand?

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

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

• As the price of a good decreases, the quantity demanded decreases.

• The quantity demanded is not affected by the price.

Which of the following is an example of a factor that can shift the supply curve?

• A change in consumer preferences

• A change in the price of related goods

• A change in technology

• A change in the number of consumers

What is the primary difference between a change in quantity demanded and a change in demand?

• A change in quantity demanded is a movement along the demand curve, while a change in demand is a shift of the demand curve.

• A change in quantity demanded is a shift of the demand curve, while a change in demand is a movement along the demand curve.

• Both involve shifts of the demand curve.

• Both involve movements along the demand curve.

What happens to the supply curve when 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 best describes the concept of elasticity in economics?

• The responsiveness of quantity demanded or supplied to changes in price

• The total amount of goods available in the market

• The difference between supply and demand

• The cost of producing one more unit of a good

What is the effect of an increase in the cost of raw materials on the supply curve?

• The supply curve shifts to the left.

• The supply curve shifts to the right.

• The supply curve becomes vertical.

• The supply curve remains unchanged.

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

• Demand for the original good will decrease.

• Demand for the original good will increase.

• Demand for the original good will remain unchanged.

• Demand for the original good will fluctuate randomly.

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

• An increase in consumer income for a normal good

• A decrease in the price of a complementary good

• An increase in the price of a substitute good

• A decrease in consumer income for a normal good

If a product has an elastic demand, what happens to total revenue when the price decreases?

• Total revenue increases.

• Total revenue decreases.

• Total revenue remains unchanged.

• Total revenue fluctuates randomly.

What is the effect of a government-imposed price floor on the market equilibrium?

• A price floor set above equilibrium price causes a surplus.

• A price floor set below equilibrium price causes a surplus.

• A price floor set above equilibrium price causes a shortage.

• A price floor set below equilibrium price causes a shortage.