11 Questions
What are the two important functions performed by a market system?
Price Determination and Resource Allocation
What happens if buyers are not willing to pay the price for goods in a market?
They will choose not to buy it or buy it somewhere else
How does the market system help allocate an economy's resources?
By allocating more resources to the production of goods in growing markets and less resources in declining markets
What are some examples of factors that can cause a shift in the supply curve?
Labor productivity, changes in the cost of production, improvements in technology, taxes, subsidies, weather conditions and health of livestock and crops, prices and products, discoveries and depletions of commodities
If the supply curve shifts to the right, what happens to the equilibrium price and quantity supplied?
The equilibrium price will fall and the quantity supplied will increase
If the supply curve shifts to the left, what happens to the equilibrium price and quantity supplied?
The equilibrium price will rise and the quantity supplied will decrease
What are some non-price determinants of supply?
Cost of production, new technology, indirect tax, subsidies, price of related goods, natural factors
What is the law of demand and how does it relate to price and quantity demanded?
The law of demand states that there is a negative causal relationship between price and quantity demanded. When the price of a product increases, the demand for it decreases, and vice versa.
What is the difference between a movement and a shift of the demand curve?
A movement along the demand curve refers to a change in quantity demanded due to a change in price, while a shift of the demand curve describes a change in overall demand caused by factors other than price.
What are some non-price determinants of demand?
Some non-price determinants of demand include income, price of related goods (substitutes and complements), demographic changes (e.g., population size, changes in population structure), fashion and tastes, and advertising.
What is the law of supply and how does it relate to price and quantity supplied?
The law of supply states that there is a positive causal relationship between price and quantity supplied. As the price of a product increases, the supply of it increases as well, and vice versa.
Test your knowledge of supply and demand in market systems with this quiz. Explore concepts such as price determination and resource allocation while learning about the dynamics of buyers and sellers.
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