18 Questions
What is a competitive market?
A market with many buyers and many sellers
What is the relative price of a good?
The ratio of its money price to the money price of the next best alternative good
What are the three conditions for demanding something?
Want it, can afford it, and have made a definite plan to buy it
What is the main tool of economics that explains how prices are determined and how they guide the use of resources?
The demand and supply model
What is the money price of a good?
The amount of money needed to buy it
Why do prices of goods and services rise and fall?
Because of changes in demand and supply
What happens to the supply curve when there is an advance in technology?
It shifts rightward
What is the situation in which the quantity demanded equals the quantity supplied?
Equilibrium
What is the result of a natural disaster on the supply curve?
It shifts leftward
What is the purpose of price in a market?
To regulate buying and selling plans
What happens to the supply curve when the price of the good changes?
There is a movement along the curve
What is the equilibrium quantity?
The quantity bought and sold at the equilibrium price
What happens when the price of a good is above the equilibrium price?
A surplus occurs, forcing the price down
What is the result of an increase in demand?
The demand curve shifts rightward
What happens when the quantity supplied equals the quantity demanded?
The price is at equilibrium
What is the result of a surplus of a good in the market?
The price falls
What occurs when the price of a good is below the equilibrium price?
A shortage occurs, forcing the price up
What is the state of the market when the quantity supplied equals the quantity demanded?
Equilibrium
This quiz covers the basics of demand and supply in a competitive market, including the influences on demand and supply, and how they determine prices and quantities.
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