Questions and Answers
What does the chart compare?
What does the vertical axis of a demand curve show?
the price of a product
What is the point where supply and demand meet called?
equilibrium
As price increases, supply decreases, but demand increases.
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What is the total amount of a product available in a market at a given price called?
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An increased interest in antique furniture over modern furniture directly affects a furniture company's supply.
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The graph shows an increase in consumer interest in a product.
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According to the law of supply, how do price and quantity move?
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According to the law of demand, how do price and quantity move?
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Lower prices tend to decrease the interest in a product.
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What factor most directly affects the demand for automobiles?
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How might a drop in price for washing machines affect the demand for dryers?
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What does a market supply schedule show?
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Which statement best explains the law of supply?
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The quantity demanded by consumers increases as prices rise, then decreases as prices fall.
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The two economic laws of supply and demand apply to real-world economics eighty percent of the time.
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Based on the graph, which event could cause the change shown?
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Study Notes
Law of Supply and Demand Overview
- The relationship between price and quantity demanded illustrates consumer interest in products.
- The price of a product is represented on the vertical axis of a demand curve.
Equilibrium Point
- Equilibrium is the point where supply and demand intersect, determining market prices.
Effects of Price Changes
- As prices rise, supply tends to decrease while demand typically increases.
Market Supply
- Supply refers to the total quantity of a product available at a specific price.
- A furniture company's supply is most directly influenced by consumer interest in product types, such as antique versus modern furniture.
Consumer Interest
- An increase in consumer interest for graphic T-shirts suggests higher demand in the market.
Laws of Supply and Demand
- According to the law of supply, price and quantity supplied move in opposite directions.
- According to the law of demand, price and quantity demanded also move in opposite directions.
Price Impact on Demand
- Lower prices generally lead to decreased consumer interest in a product.
- A drop in washing machine prices may reduce the demand for dryers as consumers opt for the less expensive appliance.
Market Supply Schedule
- A market supply schedule provides data on prices and quantities available in the entire market.
Understanding Supply and Demand Laws
- The law of supply indicates that quantity supplied decreases when prices rise and increases when prices fall.
- The law of demand asserts that quantity demanded increases as prices decrease, then decreases with rising prices.
Real-World Application
- The laws of supply and demand collectively apply to real-world economics roughly eighty percent of the time.
- Events such as product restocking can significantly impact market dynamics and consumer purchasing behavior.
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Description
This quiz explores the fundamental concepts of supply and demand in economics. It covers the relationship between price and quantity, the equilibrium point, and how price changes affect supply and demand. Test your understanding of market dynamics and consumer interest in products.
