Economics

Supply, Demand, Equilbrium, Shortage and Surplus Answers to Quiz

1. Draw a supply and demand graph and label the necessary parts. Be sure to properly label the locations of price, quantity, supply, demand, equilibrium price, surplus, and shortage.

Choose the best answer.

2. Why does the supply curve slope up and to the right?

1. As the price rises the quantity supplied by producers will fall.
2. [As the price falls the quantity supplied by producers will rise.]
3. As the price rises the quantity supplied by producers will rise.

3. Why does the demand curve slope

1. As the price falls the quantity demanded by consumers will fall.
2. As the price rises the quantity demanded by consumers will fall.
3. [ As the price rises the quantity demanded by consumers will rise.]

4. If the quantity supplied exceeds the quantity demanded, then there is a _______ in the market.

1. [Surplus]
2. Shortage
3. Supply

5. If the quantity demanded exceeds the quantity supplied, then there is a _______ in the market.

1. Supply
2. [Shortage]
3. Demand

6. Why does a business owner lower the price of products that are not selling quickly? The business owner will lower the price to gather demand and sell product

7. When would a business owner have the incentive to raise prices?
If demand was high and there wasn't enough supply.

8. What does a higher price than before for a good or service communicate to consumers about the demand for that product?
That demand is high and other customers are purchasing the service or good.