Market Equilibrium and Shifts in Supply and Demand Quiz

Market equilibrium occurs when quantity demanded by consumers equals quantity supplied by producers.

Consumers demand less of a good as its price increases, ceteris paribus.

Increase in both supply and demand keeps equilibrium quantity stable.

The efficiency and technology of production determine the supply of goods.

Price elasticity of supply measures the responsiveness of quantity supplied to price changes.

Increase in demand shifts the demand curve right, causing price and quantity to rise.

Improvements or changes in production methods can alter the supply of goods.

Consumer income influences purchasing power and hence demand for goods.

Tax raises the cost to consumers, reducing demand and thus equilibrium quantity while increasing price.

Market forces will push price and quantity towards equilibrium levels.

Subsidy lowers costs for producers, reducing price while increasing quantity supplied.

Excess supply results in a surplus of the good.

Elasticity of demand measures the sensitivity of quantity demanded to changes in price.

Price floor sets a minimum price above equilibrium, causing a surplus of the good.

Positive cross-price elasticity suggests goods are substitutes, as an increase in one's price leads to increased demand for the other.

Consumers will only buy at a specific price, regardless of quantity.

Technological advancement lowers production costs, increasing supply and reducing demand.

Deadweight loss represents the loss of economic efficiency due to market inefficiency.

The availability of substitutes influences how sensitive consumers are to price changes.