Category 1
Marcy is ready to buy a new computer, and she has saved up enough money to buy the model she wants. This is an example of
demand.
A local neighborhood has many houses for sale at a low price, but demand for the houses is low. What kind of market most likely exists in the neighborhood?
Buyer’s
When less expensive substitutes for a product are readily available, then demand for that product is likely to be more
elastic.
Which of the following determines whether consumers can purchase goods or services:
Buying power
For 20 years, Don owned a small grocery store. When several big box stores that sell groceries at discounted prices moved into the area, Don’s sales declined, and he had to close his business. Which of the factors that affect supply affected Don’s business?
Number of producers
Jeremy has $15,000 to spend on a new car. He found a car that cost $14,500, but he did not think the car was worth more than $12,000. The dealer told Jeremy that he has not been able to sell this model because other customers have expressed the same opinion as Jeremy. Does demand for this car exist?
No, because consumers are not willing to pay the price being asked for this car.
Which of the following is characteristic of a seller’s market:
High prices
Which of the following describes inelastic demand:
Not affected by price change
The price of complementary products has an effect on
demand.
What might businesses do if they expect prices to increase substantially in the future?
Keep products off the market
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
supply.
Marc wants to figure out how much changes in price will affect his business’s sales, so he pays attention to
elasticity.
Even though gasoline prices increased 15 cents per gallon as the result of the new gas tax, Alice continued to buy gas so that she could make her 20-mile drive to work. This is an example of what type of demand?
Inelastic
People often buy goods and services in order to maintain the quality of life and general living conditions to which they are accustomed. This influence on demand is referred to as
standard of living.
Which of the following factors may influence supply:
Natural disasters
When the price of Bluetooth speakers increases, the quantity of Bluetooth speakers offered for sale will increase. This is an example of the law of
supply.
Orlando changes the price of one of his products, and this price change leads to a major change in the number of people who purchase the product. This means that demand for Orlando’s product is
elastic.
A team of employees is responsible for researching potential demand for a business’s brand-new product. The factor that is most likely to affect demand for this product is the
product’s utility.
Most businesses strive to supply goods and services in direct proportion to
demand.
Which of the following might cause supply of a good to decrease:
Government regulations
Your business is selling more and more large-screen televisions each month. Applying the law of supply and demand, what do you expect to happen to the price and supply of these televisions over the next few months?
The price will increase, and supply will increase.
Demand for a good is more likely to be elastic when the good is
a luxury.
Which of the following is a factor affecting a product’s utility to the individual customer:
Consumer’s age
Your firm is considering producing a new product. Research shows that there is definitely a demand for the product and that there are currently only two other producers of this product. Which of the following might prevent your firm from producing this product:
Cost of production
One reason why the supply of certain products has been eliminated is because of
technology.