Supply And Demand Quiz

The correct answer is "Market" because a market refers to a group of people who engage in buying and selling goods or services. It is a place or a system where buyers and sellers interact to exchange goods or services based on demand and supply. In a market, prices are determined by the forces of supply and demand, and it serves as a platform for economic transactions to take place.

A change in price of a product/service affects the demand for that product/service, resulting in movement along the demand curve. When the price of a product/service decreases, the quantity demanded increases, and when the price increases, the quantity demanded decreases. This movement along the curve is known as a change in quantity demanded, which is caused by a change in price. Therefore, the statement is true.

When quantity supplied is greater than quantity demanded at the ruling price, it creates a situation known as 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 is a common occurrence in markets and can have various economic implications.

Demand refers to the desire or need for a product or service, coupled with the ability and willingness to pay for it. In other words, it represents the consumer's willingness to purchase a particular product at a given price. The concept of demand is crucial in economics as it helps determine the quantity of goods or services that consumers are willing to buy at various 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' income rises, they tend to switch to higher-quality goods or substitutes for the inferior goods. Therefore, when consumer income increases, the demand for inferior goods decreases.

The term "equilibrium" refers to the point at which the supply of a product or service matches the demand for it. It is the price at which the quantity supplied by producers is equal to the quantity demanded by consumers. This balance ensures that there is neither excess supply nor excess demand in the market, resulting in a stable and efficient allocation of resources.

According to the Law of Supply, an increase in price results in an increase in quantity supplied. This means that as the price of a good or service increases, producers are willing and able to supply more of it to the market. Higher prices incentivize producers to allocate more resources and invest in the production of the good or service, 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 buy more of as their income increases. As people have more disposable income, they are more likely to purchase these goods. Public transport and bargain goods, on the other hand, are not necessarily tied to income levels and may be purchased regardless of income.

The Law Of Demand actually helps to explain economic behaviour.