Microeconomics: Demand and Supply
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Questions and Answers

What happens to the demand for a product when its price is very high?

  • It remains the same as consumers are unaffected by price
  • It increases because consumers are willing to pay more
  • It decreases because consumers are limited by their ability to buy (correct)
  • It depends on other factors such as income and taste

    • What is plotted on the vertical axis of a simple demand curve?

  • The quantity of the good purchased
  • The income of the consumer
  • The price of the good (correct)
  • The time period of the purchase

    • Why do suppliers increase the supply of a product when the price is high?

  • Because they can maintain a profit despite higher production costs (correct)
  • Because they cannot produce more due to limited capacity
  • Because they want to reduce their profit margin
  • Because they want to reduce their inventory

    • What happens to the desired rate of production when inventory is less than the desired inventory?

    <p>It increases to meet the demand</p> Signup and view all the answers

    What is the result of a decrease in price on the interaction between supply and demand?

    <p>Supply decreases and demand increases</p> Signup and view all the answers

    What assumption do economists make when analyzing the quantity of goods sold and purchased?

    <p>All factors other than price which affect the quantity of goods sold and purchased are held constant.</p> Signup and view all the answers

    What are the two factors that determine demand according to economic theory?

    <p>Taste and ability to buy</p> Signup and view all the answers

    What happens to demand when the market price for a product is high?

    <p>Demand decreases</p> Signup and view all the answers

    Why does the demand for a product at low prices have a limit?

    <p>Because people want only a limited quantity of a good</p> Signup and view all the answers

    What happens to the amount of products that can be purchased with the same amount of money as the price increases?

    <p>It decreases</p> Signup and view all the answers

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