2. Determining Market Price
Supply and demand coordinate to determine prices by working together. competitively. with other factors. separately.
a
The graph shows excess demand. Which explains why the price indicated by p2 on the graph is lower than the equilibrium price? As prices fall, quantity demanded goes up. As prices fall, quantity demanded goes down. As prices fall, quantity demanded stays the same. As prices fall, quantity demanded disappears.
a
What happens when the quantity of a good supplied at a given price is greater than the quantity demanded? excess supply stable prices exact equilibrium increased production
a
Which explains the connection between the law of demand and excess demand? The law states that decreases in price leads to greater quantity demanded and limited supply, which occurs during excess demand. The law states that increases in price increases leads to greater quantity demanded and limited supply, which occurs during excess demand. The law states that decreases in price leads to greater supply and equilibrium, which occurs during excess demand. The law states that increases in price leads to greater supply and equilibrium, which occurs during excess demand.
a
Which occurs during market equilibrium? Check all that apply. Supply and demand meet at a specific price. Supply is slightly greater than demand. Supply and demand meet at a specific quantity. Supply and demand meet at a demand point. Supply and demand meet at a supply point.
a, c
Both excess supply and excess demand are a result of equilibrium. disequilibrium. overproduction. elasticity.
b
The graph shows a point of equilibrium. If the quantity supplied is greater than the quantity demanded, what must happen to the price in order to reach equilibrium? The price of the product will increase to meet equilibrium. The price of the product will decrease to meet equilibrium. Supply and demand must be raised. Supply and demand must be lowered.
b
The graph shows excess supply. Which needs to happen to the price indicated by p2 on the graph in order to achieve equilibrium? It needs to be increased. It needs to be decreased. It needs to reach the price ceiling. It needs to remain unchanged.
b
Which explains the connection between the law of demand and excess demand? The law states that decreases in price leads to greater quantity demanded and limited supply, which occurs during excess demand. The law states that increases in price increases leads to greater quantity demanded and limited supply, which occurs during excess demand. The law states that decreases in price leads to greater supply and equilibrium, which occurs during excess demand. The law states that increases in price leads to greater supply and equilibrium, which occurs during excess demand.
b
On a graph, a(n) ___ shows the demand portion of equilibrium.
demand curve
