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Questions and Answers
Excess demand for a product means that the consumers want more than what the producers are willing to supply.
Excess demand for a product means that the consumers want more than what the producers are willing to supply.
False (B)
Income of the consumer is directly related to the demand for inferior goods.
Income of the consumer is directly related to the demand for inferior goods.
True (A)
Market supply function is equal to the number of sellers multiplied by the individual demand function.
Market supply function is equal to the number of sellers multiplied by the individual demand function.
False (B)
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Study Notes
Demand and Supply
- Excess demand occurs when consumers want to buy more of a product than what producers are willing to supply.
- Consumers' income has a direct impact on the demand for inferior goods, implying that as income increases, demand for inferior goods also increases.
Market Supply Function
- The market supply function is not equal to the number of sellers multiplied by the individual demand function, as this statement is incorrect.
- Note: Market supply function represents the total quantity of a product that suppliers are willing to supply at a given price level.
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