Supply & Demand Test Review

Which statement describes the law of demand?

• As prices rise, quantity demanded decreases

• As prices rise, demand decreases.

• As prices fall, quantity demanded decreases.

• As prices fall, demand decreases.

Which explains why a supply line is upward sloping?

• the Law of Demand states there is an indirect relationship between price and quantity

• the Law of Supply states there is a direct relationship between price and quantity

• the Law of Supply compares marginal costs and marginal benefits in a constant rate

• the Law of Demand shows a positive relationship between two goods, creating the slope

Which is an example of the Law of Demand at work?

• The price of the pizza goes up when the price of cheese goes up.

• Demand for pizza goes down when tacos become more popular

• The price of pizza falls when the demand for pizza falls

• Demand for pizza rises when the price of pizza falls

What causes a shift in the demand curve?

• A decrease in price

• An increase in price

• A change in an area other than price

• A change in price and availability

The amount of a good or service that producers are willing and able to sell at all possible prices during a given period of time.

• Supply

• Demand

• Factor of Production

• Production

The market equilibrium price is the price at which

• surpluses depress the number of goods supplied

• shortages and surpluses will have no effect on the market

• the government will not intervene in the market

• the quantity demanded is the same as the quantity supplied

What is the Equilibrium Price?

• 1

• 2

• 3

• 4

The diagram represents a(n)

• increase in supply

• decrease in supply

• change in quantity supplied

• none of the above

The diagram represents a

• increase in demand

• decrease in demand

• change in quantity demand

• none of the above

In a market economy, who decides on the price of goods and services

• government
• buyers and sellers
• firms
• local leaders