Demand and Supply

Question 1

The quantity demanded of a good is

Answer 1

The amount of a good that buyers are willing and able to purchase

Question 2

The supply curve of a good is

Answer 2

A graph showing the relationship between the price of a good and the amount that sellers are willing and able to sell

Question 3

Market-day Supply Curve

Answer 3

Vertical at a fixed quantity supplied

Question 4

Equilibrium Price

Answer 4

Point where the supply and demand curves intersect. At the equilibrium price the market clears: the quantity demanded equals the quantity supplied.

Question 5

Shortage (on intersecting graph)

Answer 5

Below equilibrium point

Question 6

Surplus (on intersecting graph)

Answer 6

Above equilibrium point

Question 7

Law of Demand (Cookie Example)

Answer 7

There is a negative relationship between a good’s price and the quantity demanded. The customary negative slope of a demand curve is the graphical representation of the law of demand.

“As the price of cookies increases, the quantity of cookies demanded decreases.”

Question 8

Complements

Answer 8

if an increase in the price of one causes the demand curve for the other to shift to the left

Question 9

Substitutes

Answer 9

if an increase in the price of one causes the demand curve for the other to shift to the right

Question 10

Quantity Supplied of a good is

Answer 10

The amount of a good that sellers are willing and able to sell