5 Questions
What happens to prices when demand exceeds supply for a good or service?
Prices rise
According to the law of supply and demand, what happens when supply exceeds demand for a good or service?
Prices fall
What is the relationship between supply and prices of goods and services when demand is unchanged?
Inverse
What happens to prices when there is an increase in supply while demand remains the same?
Prices fall
What happens to prices when there is a decrease in supply while demand remains the same?
Prices rise
Study Notes
Supply and Demand
- When demand exceeds supply for a good or service, prices tend to rise.
- Conversely, when supply exceeds demand for a good or service, prices tend to fall.
Supply and Prices
- When demand is unchanged, an increase in supply leads to a decrease in prices.
- When demand is unchanged, a decrease in supply leads to an increase in prices.
Note: The above notes summarize the relationships between supply, demand, and prices, providing key facts for understanding the law of supply and demand.
Test your knowledge of the law of supply and demand with this quiz! Explore the relationship between supply, demand, and prices, and understand how they interact in the economy. Challenge yourself with questions about the inverse relationship between supply and prices, and enhance your understanding of this fundamental economic principle.
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