Demand and Supply Model
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Questions and Answers

What happens to the quantity supplied when there is a shortage in the market for coffee?

  • It fluctuates randomly.
  • It decreases.
  • It increases. (correct)
  • It remains constant.

    • What is the impact of a price above the equilibrium price in the market for coffee?

  • It has no effect on the market.
  • It leads to a decrease in demand.
  • It causes a shortage.
  • It results in a surplus. (correct)

    • How do sellers typically respond to a surplus in the market for coffee?

  • By increasing prices.
  • By exiting the market.
  • By maintaining prices.
  • By decreasing prices. (correct)

    • What does a shortage indicate in the market for coffee?

    <p>Quantity demanded exceeds quantity supplied at the current price.</p> Signup and view all the answers

    How does the quantity of coffee supplied change when the price of coffee begins to fall?

    <p>It decreases.</p> Signup and view all the answers

    What happens to the supply curve in response to a reduction in price?

    <p>It remains unchanged</p> Signup and view all the answers

    At what point does price stop falling and reach its equilibrium level?

    <p>When the demand and supply curves intersect</p> Signup and view all the answers

    What defines a surplus in a market?

    <p>When the quantity demanded exceeds the quantity supplied at the current price</p> Signup and view all the answers

    Why is there no surplus at the equilibrium price?

    <p>Because the market is not in equilibrium at that price</p> Signup and view all the answers

    What does it mean when the demand and supply curves intersect?

    <p>The equilibrium price is reached</p> Signup and view all the answers

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