Supply and Demand Basics
Explore the fundamental concepts of supply and demand, how they interact, and their impact on prices in a market economy.
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Supply and Demand Basics
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Read each question carefully and answer to the best of your ability. Use complete sentences for short answer questions.
1. What happens to the demand for a product when its price decreases?
Demand decreases
Demand increases
Demand stays the same
Supply increases
2. What is the term for the amount of a good or service that producers are willing and able to offer for sale at various prices?
Demand
Supply
Equilibrium
Scarcity
3. The point where supply and demand are equal is called the price.
4. When demand exceeds supply, it creates a of goods.
5. An increase in the cost of production would likely lead to a decrease in .
6. If a product becomes very popular, its demand curve will shift to the left.
True
False
7. Technological advancements typically increase supply.
True
False
8. Explain the 'Law of Demand' in your own words.
9. Describe one factor that can cause a shift in the supply curve, and explain how it affects supply.
Use the words below to complete the sentences.
10. When the quantity demanded is greater than the quantity supplied, there is a .
11. If the market is too high, it can lead to a surplus of goods.