Supply and Demand

Which statement expresses a central idea of how the laws of supply and demand work?

• The government sets the prices for goods and services.
• Prices are determined by the interaction of producers and consumers.
• Consumers alone determine the prices for goods and services.
• Technology dictates the prices charged for goods and services.

Which situation is most likely to lead to the lowest prices?

• There is only one producer making the good.
• Businesses secretly agree to share their profits.
• Competition between businesses is prohibited.
• Several producers compete to sell goods to the public.

When companies compete in a market economy, what is usually the result?

• Consumers are able to buy goods for the best available price.
• People pay much higher prices for goods.
• There are frequent shortages of goods on the market.
• Producers refuse to sell some of their products.

Read the following situation to determine what the outcome would be:

A new type of television set uses 3-D images. many stores will have large quantities of the older style televisions. What will happen to the price of these older televisions? 

• The price will remain the same.
• The price will rise.
• The price will fall.

The price at which the quantity demanded by consumers equals the quantity suppled by the producers is know as what?

• Competition
• The Law of Supply
• The Law of Demand
• The Equilibrium Price

This term refers to how much of a good or service consumers are willing to buy at a particular price.

• Demand
• Compettition
• Supply
• Equilibrium Price

What is most likely to happen if the demand for a product increases but the supply remains the same?

• The price will decrease.

• The price will increase.

• The price will stay the same.

• The product will be removed from the market.

Which of the following best describes the law of supply?

• As prices rise, producers are willing to supply more of a good.

• As prices fall, producers supply more of a good.

• Producers always supply the same amount regardless of price.

• Consumers control the amount supplied.

If a new competitor enters the market selling the same product, what is the most likely effect on prices?

• Prices will increase.

• Prices will decrease.

• Prices will become unpredictable.

• Prices will not change.

When the supply increases, the price _____ and the quantity demanded _____.

• decreases; increases

• decreases; doesn't change

• increases; decreases

• increases; doesn't change