Economics Demand Concepts Quiz

The price of a good in terms of another good. It's calculated by dividing the price of one item by the price of another.

The number of units buyers are willing and able to purchase at a specific price during a given time period

The willingness and ability of buyers to purchase different quantities of a good at different prices during a specific time period.

As the price of a good increases, the quantity demanded of that good decreases, and vice versa, assuming all other factors remain constant.

An assumption used to isolate the effect of one variable on an outcome while holding all other variables constant.

A tabular representation of the quantity demanded of a good at various prices.

A graphical representation of the relationship between the price of a good and the quantity demanded, showing the law of demand.

A demand curve illustrates the relationship between the price of a good and the quantity consumers are willing to buy, assuming everything else remains constant.

Ceteris paribus is a Latin phrase meaning 'all other things being equal.' It's a crucial assumption used in economics to isolate the effect of a single variable on another, keeping everything else constant.

The demand curve graphically represents the law of demand. The downward slope of the curve demonstrates that as the price of a good increases, the quantity demanded decreases, and vice versa, assuming all other factors remain constant.

When the price of a good increases, other things being equal, the quantity demanded decreases. This is represented by a movement upward along the demand curve.

When the price of a good decreases, other things being equal, the quantity demanded increases. This is represented by a movement downward along the demand curve.

A demand curve also represents the willingness and ability of consumers to pay for a good. The higher the price, the fewer consumers are willing and able to buy, indicating a lower willingness to pay.

Individual demand refers to the demand of a single consumer for a particular good.

Market demand is the total demand for a specific good or service in a particular market. It represents the sum of individual demands from all consumers in that market.

Goods that are used together, and where a lack of one good makes the other less useful. Demand for one good increases when the price of the other falls, creating a negative relationship between their prices and quantities.

Changes in the expected future price of a good influence current demand. If prices are expected to rise, current demand increases, shifting the demand curve rightward. If prices are expected to fall, current demand decreases, shifting the demand curve leftward.

A good whose demand increases as income increases.

A good whose demand decreases as income increases.

A good whose demand remains unchanged regardless of income changes.

An increase in expected future income, or easier access to credit, can lead to higher current demand, and vice versa.

A change in demand, caused by factors other than price, is represented by a shift in the entire demand curve. Shifts to the right indicate increased demand, shifts to the left indicate decreased demand.

Factors other than price that can influence the demand for a good, causing shifts in the demand curve. Examples include expected future prices, income, expected future income, and credit availability.

Changes in supply are represented by a shift in the supply curve. Factors that can cause a shift include changes in the number of suppliers, government policy, technology, and the state of nature.

An increase in the number of producers in the market leads to an increase in supply, causing the supply curve to shift to the right.

Government subsidies provide financial assistance to producers, encouraging them to produce more goods and services, thus increasing supply and shifting the supply curve to the right.

Technological advancements can lower production costs and create new products, resulting in an increase in supply and a rightward shift of the supply curve.

Natural events, such as extreme weather or disasters, can disrupt production processes, leading to a decrease in supply and a leftward shift of the supply curve. This is also known as a supply shock.

A change in quantity supplied refers to a movement along the existing supply curve, caused solely by a change in the price of the good.

The only factor that can directly cause a change in the quantity supplied of a good is a change in the price of the good itself.

A change in quantity supplied is a movement along the supply curve due to a price change, while a change in supply is a shift of the entire curve due to factors other than price.

When demand increases, the equilibrium price rises, and the equilibrium quantity also increases. This is because buyers are willing to pay more for the good, leading to a higher price and a larger quantity sold.

When demand decreases, the equilibrium price falls, and the equilibrium quantity also decreases. This is because buyers are willing to pay less for the good, leading to a lower price and a smaller quantity sold.

When supply increases, the equilibrium price falls, and the equilibrium quantity increases. This is because more goods are available, leading to a lower price and a larger quantity sold.

When supply decreases, the equilibrium price rises, and the equilibrium quantity decreases. This is because fewer goods are available, leading to a higher price and a smaller quantity sold.

When both demand and supply increase, the equilibrium quantity increases. This is because there is more demand and more supply, leading to more goods sold.

When both demand and supply increase, the change in equilibrium price is uncertain. The increase in demand pushes the price up, while the increase in supply pushes the price down.

Equilibrium represents a state in the market where supply and demand are balanced. At equilibrium, the quantity supplied equals the quantity demanded, and there is no pressure for the price to change.

A market equilibrium is a specific point where supply and demand forces meet, resulting in a stable price and quantity of a good or service.

When both demand and supply decrease, the impact on the equilibrium price is uncertain. The decrease in demand lowers the price, while the decrease in supply raises the price. The overall effect depends on the magnitude of each change.

When both demand and supply decrease, the equilibrium quantity always decreases. This is because both forces are reducing the amount of goods consumers want and producers are willing to offer.

When demand decreases and supply increases, the equilibrium price always falls. The decrease in demand lowers the price, and the increase in supply further reduces the price.

When demand decreases and supply increases, the impact on the equilibrium quantity is uncertain. While the decrease in demand would lower the quantity, the increase in supply would raise it. The overall effect depends on the magnitude of each change.

When demand increases and supply decreases, the equilibrium price always rises. The increase in demand raises the price, while the decrease in supply further increases the price.

When demand increases and supply decreases, the impact on the equilibrium quantity is uncertain. The increase in demand would raise the quantity, while the decrease in supply would lower it. The overall effect depends on the magnitude of each change.

The quantity of a good or service that is both demanded and supplied at a specific price, creating a balance between buyers and sellers.

The price at which the quantity demanded of a good or service equals the quantity supplied, leading to a stable market condition.