Chapter 1: Demand and Supply

Question 0

What does the law of demand say?

Answer 0

There is an inverse relationship
Between price and quantity demanded
Ceteris paribus

Question 1

What is demand for a product?

Answer 1

Quantity people are 
Willing and able 
To buy at different prices 
In a specified time period
Ceteris paribus

Question 2

Inverse relationship in law of demand is due to

Answer 2

Substitution effect

Income effect

Question 3

A market demand curve is

Answer 3

Downward sloping

Question 4

What causes a movement?

Answer 4

Change in price

Question 5

What causes a shift?

Answer 5

Change in non price determinants

Question 6

How are quantity demanded and demand different?

Answer 6

Quantity demanded is used for price

Demand is used for non price determinant

Question 7

What are the non price determinants

Answer 7

Price of related goods
Income
Population size
Tastes and preferences
Expectations

Question 8

What are the related goods?

Answer 8

Substitutes

Complements

Question 9

What are substitutes?

Answer 9

Goods that are used to satisfy a similar want

Question 10

What are complement goods?

Answer 10

Goods used together for consumption

Question 11

What are the type of goods affecting by income?

Answer 11

Normal

Inferior

Question 12

Population size affects the

Answer 12

Number of buyers in the market

Question 13

Tastes and preferences refer to how

Answer 13

Desirable consumers find the good

Question 14

Tastes and preferences are affected by

Answer 14

Advertising or promotion

Question 15

Expectations is the

Answer 15

Consumers expectation of future prices

Question 16

Supply of a product is

Answer 16

Quantity producers
Are willing and able to
Make available for sale
At different prices
In a specified time period 
Ceteris paribus

Question 17

The law of supply states that

Answer 17

A direct relationship between price of product and quantity supplied

Question 18

What are the non price determinants of supply?

Answer 18

Price of productive resources
Technology and productivity
Number of suppliers
Price of related goods produced

Question 19

Prices of productive resources affect

Answer 19

Cost of production

Question 20

What are productive resources

Answer 20

Wage
Raw materials
Interest rate

Question 21

Increase in COP will lead to lower supply because

Answer 21

Profits earned is lower

Question 22

Technology and productivity refers to

Answer 22

Technological progress
Production technique

Affects productivity

Question 23

Goods that are substitutes in production are

Answer 23

Competitive in supply

Question 24

Goods that are complements in production are in

Answer 24

Joint supply

Question 25

What is equilibrium

Answer 25

Stable point

Question 26

Market equilibrium price is price when

Answer 26

Qty supplied = qty demanded

Question 27

When market price is above equilibrium there is

Answer 27

Surplus/excess supply (supply>demand)

Question 28

How does a surplus adjust?

Answer 28

Competing suppliers Consumers seek to purchase at lower prices Downward pressure on price Price fall back to equilibrium

Question 29

What happens when there market price is below equilibrium?

Answer 29

Shortage (demand>supply)

Question 30

How does a shortage adjust?

Answer 30

Competing consumers Producers seek to seek to sell at high prices Upward pressure on price Price increase

Question 31

When supply or demand changes there is a change in

Answer 31

Market equilibrium | Change in price and quantity