3.1.3.3 Price determination

• The interaction between supply and demand is a key driver of the price mechanism.
• What is the equilibrium quantity in a market?

  Quantity bought and sold at equilibrium price
• What are supply and demand in economics?

  Relationship between producers and consumers
• The quantity of a good or service consumers are willing to buy at different prices is called demand
• What is the equilibrium quantity in a market?

  Quantity bought and sold at equilibrium price
• Match the curve with its characteristic:

  Supply Curve ↔️ Upward sloping

  Demand Curve ↔️ Downward sloping
• If more farmers produce wheat, the supply increases, lowering the equilibrium price
• If consumer interest in wheat bread increases, demand rises, raising the equilibrium price
• Match the economic concept with its definition:

  Supply ↔️ Quantity producers sell at different prices

  Demand ↔️ Quantity consumers buy at different prices
• The quantity of a good or service producers are willing to sell at different prices is called supply
• The equilibrium price is the price where supply equals demand.


  True
• The equilibrium price is the intersection point of the supply and demand curves.


  True
• One factor affecting supply is the cost of production
• What happens to the equilibrium price when supply increases and demand remains constant?

  Decreases
• Supply and demand describe the relationship between producers and consumers in a market.


  True
• The equilibrium price is the point where the supply curve and demand curve intersect.


  True
• What is the definition of the supply curve?

  Quantity producers sell at different prices
• The supply curve is upward sloping, while the demand curve is downward sloping.
• A new technology that lowers the cost of production increases supply and lowers prices.

  True
• What is the market clearing price in a market?

  Price where quantity supplied equals quantity demanded
• Achieving the market clearing price ensures efficient resource allocation.

  True
• Match the factor with its effect on supply or demand:

  Cost of Production ↔️ Affects Supply

  Consumer Income ↔️ Affects Demand
• Order the changes in equilibrium price based on changes in supply or demand:

  1️⃣ Increase in Supply: Decreases Price

  2️⃣ Decrease in Supply: Increases Price

  3️⃣ Increase in Demand: Increases Price

  4️⃣ Decrease in Demand: Decreases Price
• If there is an imbalance between supply and demand, the price will adjust until the market clears.