Supply And Demand - Practice Quiz

The correct answer is "Market" because a market refers to a group of people who engage in the buying and selling of goods or services. It is a place where buyers and sellers come together to exchange products or services based on their needs and preferences. In a market, the forces of supply and demand interact to determine prices and quantities of goods or services traded.

A change in price of a product/service leads to movement along the demand curve because price is one of the key factors that affects the quantity demanded. When the price of a product/service increases, the quantity demanded usually decreases, leading to a movement upwards along the demand curve. Conversely, when the price decreases, the quantity demanded usually increases, resulting in a movement downwards along the demand curve. Therefore, it is true that a change in price of a product/service results in movement along the curve.

When quantity supplied is greater than quantity demanded at the ruling price, it creates a situation called "excess supply." This means that there is an oversupply of the product in the market, and sellers are unable to sell all of their goods. As a result, they may be forced to lower the price in order to stimulate demand and clear the excess supply. This imbalance in supply and demand can lead to a decrease in prices and potentially affect the profitability of producers.

Demand refers to the desire or need of consumers to own a particular product or service, along with their willingness and ability to pay for it. It represents the quantity of a product or service that consumers are willing to buy at a given price. In other words, demand reflects the relationship between price and quantity demanded, indicating how much consumers are willing to purchase at different price levels.

When consumer income rises, the demand for inferior goods decreases. Inferior goods are those for which demand decreases as consumer income increases. This is because as consumers have more disposable income, they tend to switch to higher quality or more expensive alternatives, leading to a decrease in demand for inferior goods.

The correct answer is "Equilibrium." In economics, equilibrium refers to the point where the quantity of a good or service supplied is equal to the quantity demanded. At this price, there is no shortage or surplus in the market, and both buyers and sellers are satisfied. The other options, "equilibrium," "equalibrium," and "equalibream," are misspellings and do not accurately represent the concept.

An increase in price results in an increase in the quantity supplied according to the Law of Supply. This means that as the price of a good or service increases, producers are willing to supply more of it to the market. This is because higher prices incentivize producers to allocate more resources and invest in the production of the good, leading to an increase in the quantity supplied.

The demand curve actually shows the relationship of quantity and price demanded.

TV/Radio and Mobile Phone would be considered normal goods because they are both products that people typically purchase more of as their income increases. As people's income rises, they have more disposable income to spend on luxury items like TVs, radios, and mobile phones. Therefore, the demand for these goods tends to increase with higher income levels, making them normal goods. On the other hand, Public Transport and Bargain Goods are not normal goods as their demand does not necessarily increase with higher income levels.

The Law Of Demand actually helps to explain economic behavior.