Supply and Demand

Question 1

Sellers and Buyers

Answer 1

Sellers = determine the supply of a product

Buyers = determine the demand of a product

Question 2

Types of markets

Answer 2

Monopoly - one seller sets price
Oligopoly - sellers not competing aggressively
Monopolistic - sellers selling different products

Question 3

Relationship between quantity demanded and price

Answer 3

Q.D - Quantity of goods customers demand

The downward sloping line relating price and quantity demanded is called the demand curve.

Question 4

Relationship between Price and Quantity supplied

Answer 4

Quantity supplied is the amount that sellers are willing and able to sell.

When the price of a good rises, the quantity producers are willing to supply also rises.

Profitable to sell at a higher price.
When the price falls the quantity
supplied also falls

Question 5

Equilibrium & Equilibrium price (1)

Answer 5

When quantity supplied equals the quantity demanded due to equilibrium price.

Question 6

Demand curve shifts

Answer 6

Demand ⬆️ then curve shifts ➡️

Demand ⬇️then curve shifts⬅️

Question 7

Equilibrium and Equilibrium price (2)

Answer 7

When market price is above the equilibrium price there would be a surplus that is = excess supply
If the market price was set below the equilibrium price there would be a shortage = excess demand

The law of supply and demand claims that price adjusts so that the equilibrium point is reached