Economics Demand and Supply Quiz

The satisfaction or happiness a consumer derives from consuming a good or service.

A theory that assumes consumer utility can be measured numerically and that consumers aim to maximize their total utility.

Consumers strive to allocate their budget among goods and services to achieve the highest possible total utility.

A theory that focuses on how consumers rank their preferences without needing to assign numerical values to utility.

The relationship between the price of a good and the quantity demanded by consumers.

The relationship between the price of a good and the quantity supplied by producers.

The point where the quantity supplied of a good equals the quantity demanded, resulting in a stable price.

A measure of the responsiveness of the quantity demanded or supplied to changes in price.

The process that transforms inputs into outputs.

The costs incurred by producers in producing goods or services.

The point where the quantity of a good supplied by producers matches the quantity demanded by consumers, resulting in a stable price.

When the price of a good is above the equilibrium price, the quantity supplied exceeds the quantity demanded, leading to a surplus of goods.

When the price of a good is below the equilibrium price, the quantity demanded exceeds the quantity supplied, resulting in a shortage of goods.

Factors like changes in consumer preferences, income levels, or prices of related goods can cause demand to increase or decrease.

Changes in resource prices, technological advancements, or government policies can cause supply to increase or decrease.

The idea that the value of a good or service is different for each person based on their needs and preferences.

The usefulness or satisfaction that is derived from consuming extra units of a good or service.

The principle stating that, as a person consumes more units of a good or service, the additional satisfaction (marginal utility) derived from each extra unit decreases.

The point where a consumer's budget is allocated across different goods and services to maximize their satisfaction.

If consumers have more money to spend (higher income), they'll likely purchase more of a good or service, shifting the demand curve to the right. This leads to a higher equilibrium price and quantity.

When the price of a substitute good goes up, people will choose to buy more of the good in question, shifting the demand curve to the right. This leads to a higher equilibrium price and quantity.

When the price of a complementary good goes up, people will buy less of the good in question, shifting the demand curve to the left. This leads to a lower equilibrium price and quantity.

When businesses have to pay more for resources like labor or raw materials, it costs more to produce goods, reducing the supply. The supply curve shifts to the left, leading to a higher equilibrium price and a lower equilibrium quantity.

A technological advancement makes production more efficient, allowing businesses to produce more goods at a lower cost. This increases the supply, shifting the supply curve to the right, leading to a lower equilibrium price and a higher equilibrium quantity.

If producers expect prices to rise in the future, they may choose to decrease supply now, holding back goods to sell later at a higher price. This shifts the supply curve to the left, leading to a higher equilibrium price and a lower equilibrium quantity.

When more firms enter the market, the supply of the good increases, shifting the supply curve to the right. This leads to a lower equilibrium price and a higher equilibrium quantity.

A decrease in the number of suppliers in a market means there's less supply, shifting the supply curve to the left. This leads to a higher equilibrium price and a lower equilibrium quantity.

A place where buyers and sellers meet to exchange goods and services.

The relationship between the price of a good and the quantity demanded by consumers. It shows how much consumers are willing and able to buy at different prices.

The relationship between the price of a good and the quantity supplied by producers. It shows how much producers are willing and able to sell at different prices.

Goods that are used together. If the price of one good goes up, the demand for the other good goes down.

Goods that can be used in place of each other. If the price of one good goes up, the demand for the other good goes up.

A measure of how responsive the quantity demanded is to changes in price. It tells us how much the quantity demanded changes for every 1% change in price.

A measure of how responsive the quantity demanded is to changes in income. It tells us how much the quantity demanded changes for every 1% change in income.

This stage of production occurs when adding more variable inputs leads to an increase in total product (TP), but at a decreasing rate. Marginal product (MP) remains positive, but decreasing.

In this stage, each additional unit of variable input (like labor) results in a decrease in total product (TP). This occurs because adding more inputs leads to negative marginal product (MP).

The relationship between the total product (TP), marginal product (MPL), and average product (APL) is crucial in understanding the different stages of production.

MPL is increasing when TP is increasing at an increasing rate.

MPL starts to fall but remains positive when TP is increasing at a decreasing rate.

MPL reaches zero when TP is at its maximum.

MPL becomes negative when TP is falling.

The MPL curve reaches its maximum before the APL curve, and when APL is rising, MPL is above it; when APL is falling, MPL is below it.