Market Forces Quiz

Questions and Answers

The forces that make market economies work

Competitive markets

Supply and demand

Influencing prices and quantities of goods and services Signup and view all the answers

Interacting with one another in competitive markets Signup and view all the answers

The responsiveness of quantity demanded or quantity supplied to a change in one of its determinants Signup and view all the answers

How much the quantity demanded of a good responds to a change in the price of that good Signup and view all the answers

When a small change in price leads to a large change in quantity demanded Signup and view all the answers

Unitary elasticity, meaning the percentage change in quantity demanded is equal to the percentage change in price Signup and view all the answers

It measures the responsiveness of quantity supplied to a change in price Signup and view all the answers

Study Notes

Supply and demand refer to the availability of a particular product or service and the desire of consumers to purchase it.
In a free market economy, supply and demand interact with the behavior of people to determine the prices of goods and services.
Economists frequently refer to supply and demand as the most influential forces in market economies.

Elasticity measures how responsive the quantity of a good or service is to changes in its price or other influential factors.
The price elasticity of demand is specifically concerned with how responsive the quantity demanded of a good is to changes in its price.

Demand is considered elastic if a small price change leads to a large change in the quantity demanded.

A price elasticity of demand equal to 1 indicates that the percentage change in quantity demanded is equal to the percentage change in price.

The concept of elasticity also applies to quantity supplied, measuring how responsive the quantity supplied of a good is to changes in its price or other influential factors.