Supply and Demand Practice Test

What factor has eliminated the supply of certain products?

Technology

What three factors affect a product's elasticity?

availability of other products, e.g., luxuries not necessary to survive; availability of substitute products; and amount of consumer income available to spend.

The best time for consumers to purchase products at reduced prices is when a(n) __________ market exists.

buyers

The factor affecting demand that involves the amount of money available to spend is known as

buying power

Some products are used together, so the demand for the main product influences the demand for the

complementary product

Name six factors that affect supply.

cost of production number of producers future prices disasters and emergencies government technology.

The quantity of a good or service that consumers are ready to buy at a given price at a particular time is known as

demand.

Name three factors necessary for demand to exist

desire for a product; buying power to pay for the product; and willingness to exchange buying power

If the demand for products changes in relation to changes in price, __________ demand exists.

elastic

An indication of how changes in price will affect changes in the amounts demanded and supplied is known as

elasticity

If the demand for a good or service is constant regardless of its price, __________ demand exists

inelastic

The economic principle which states that the quantity of a good or service that consumers will buy varies inversely with the price of the good or service is known as

law of demand

An economic principle that states that the quantity of a good or service that will be offered for sale varies in direct relation to its selling price is known as the

law of supply

The concept that the supply of a good or service will increase when the demand is great and decrease when demand is low is known as the

law of supply and demand

When the demand is so great that customers will buy regardless of high prices, a(n) __________ market exists.

seller's

The quantity of a good or service that producers are able and willing to offer for sale at a specified price in a given period of time is known as

supply

How do consumer expectations affect demand?

they often wait to buy if they think prices will drop and they will get a bargain later

A product will be in demand if it provides _________ to the potential customer.

utility