Lesson 1 - Demand and Supply Flashcards
What is a market?
A market is a place where buyers and sellers come together to exchange goods and services.
True or False: Supply refers to the quantity of a good that producers are willing to sell at various prices.
True
Fill in the blank: Demand is the quantity of a good that consumers are willing to _____ at various prices.
purchase
What does the law of demand state?
The law of demand states that, all else being equal, as the price of a good decreases, the quantity demanded increases, and vice versa.
Multiple Choice: Which of the following factors can shift the demand curve?
Consumer income
What is the law of supply?
The law of supply states that, all else being equal, as the price of a good increases, the quantity supplied increases, and vice versa.
True or False: Equilibrium is reached when the quantity supplied equals the quantity demanded.
True
What happens when there is a surplus in the market?
When there is a surplus, the quantity supplied exceeds the quantity demanded, leading to downward pressure on prices.
What does a shift in the supply curve indicate?
A shift in the supply curve indicates a change in the quantity supplied at every price, often due to factors like production costs or technology.
Fill in the blank: The intersection of the supply and demand curves determines the market _____ for a good.
price
Multiple Choice: Which of the following is NOT a determinant of demand?
Production technology
What is meant by ‘price elasticity of demand’?
Price elasticity of demand measures how much the quantity demanded of a good responds to a change in its price.
True or False: Inelastic demand means that consumers are very responsive to price changes.
False
What is consumer surplus?
Consumer surplus is the difference between what consumers are willing to pay for a good and what they actually pay.
What is producer surplus?
Producer surplus is the difference between what producers are willing to accept for a good and the price they actually receive.
