Definitions Quiz

Question 1

A Market

Answer 1

any convenient set of arrangements by which buyers and sellers communicate to exchange goods and services.
Ex: Online Shopping

Question 2

Demand

Answer 2

the willingness and ability to consume a product of various prices.
Ex: Demand Curve for Shwarma

Question 3

The Law of Demand

Answer 3

As the price of a product falls, the quantity demanded of the product will increase; ceteris paribus
Ex: I will buy 2 more bars of white chocolate at 5 SAR a piece than 10 SAR

Question 4

Ceteris Paribus

Answer 4

Latin for all else remaining equal
Ex: A demand curve assumes the only thing that will affect the quantity demanded is the prices and assumes all other determinants are constant

Question 5

Demand Curve

Answer 5

graphical representation of the law of demand. It is(usually) a downward-sloping curve (or line) illustrating the inverse relationship between price and quantity demanded
Ex: Demand Curve for Shwarma

Question 6

Supply

Answer 6

the quantity of goods that suppliers are willing to sell at any given price over a period of time.
Ex: Supply Curve for Shwarma

Question 7

The Law of Supply

Answer 7

As the price of a product increases, the quantity supplied will increase, ceteris paribus.
Ex: Hershey’s will make more white chocolate if the price of chocolate is higher because they make more money per chocolate bar.

Question 8

Supply Curve

Answer 8

graphical representation of the law of supply. It is (usually) an upward-sloping curve (or line) illustrating the direct relationship between price and quantity supplied
Ex: Supply Curve for Shwarma

Question 9

Equilibrium Price

Answer 9

the price at which there is no tendency to change because quantity demanded is equal to the quantity supplied
Ex: Intersection of the Demand and Supply Curves for Shwarma

Question 10

Maximum Price

Answer 10

a price ceiling set by the government where the price is not allowed to rise above this set level (although it is allowed to fall below).
Ex: If Mexico went to war with China so Mexico passed a law saying that the price of beans couldn’t be more than 2 dollars to guarantee that the majority of people would be able to afford beans throughout the war

Question 11

Minimum Price

Answer 11

A price floor set by the government or an organization. The price may not fall below it, although it can rise above it.
Ex: a company that sells oranges set the minimum price to $2 per kg then that would mean that the oranges cannot be worth less than $2 per kg.