When supply exceeds demand, sellers must lower prices to stimulate sales, when demand exceeds supply, prices increase as buyers compete to buy goods. What this theory is called in economics?

Related Mcqs:

1. Suppose there is an increase in the both the supply and demand for personal computers Further, suppose the supply of personal computer increase more than demand for personal computers In the market for personal computers i the market for personal computers, we would expect ?

   A. the change in the equilibrium quantity to be ambiguous and the equilibrium price to fall.
   B. the equilibrium quantity to rise and the equilibrium price to rise
   C. the equilibrium quantity to rise and the change in the equilibrium price to be ambiguous
   D. the equilibrium quantity to rise and the equilibrium price to fall
   E. the equilibrium quantity to rise and the equilibrium price to remain constant

2. What is called increased demand for a limited supply of goods and service result of which is increase in consumer prices ?

   A. Demand push
   B. Demand pulls
   C. Cost pull
   D. Demand supply

3. If your income doubles and the prices of the goods you buy double then your demand for these goods will likely?

   A. increase
   B. not change
   C. decrease
   D. shift

4. The Phillips curve is an extension of the model of aggregate supply and aggregate demand because, in the short run, an increase in aggregate demand increase price and ?

   A. decreases unemployment
   B. decrease growth
   C. increases unemployment
   D. decreases inflation

5. The demand for ice-cream is lower outside of summer causing lower demand for ice-cream salesman if they cannot find other work, this is called _______ unemployment?

   A. Regional
   B. structural
   C. seasonal
   D. demand-deficient

6. In certain industries Japanese employers hesitate to lay off workers Therefore they sometimes have excess supplies of goods that they cannot sell on the home market without lowering prices. To hold down losses they sell goods in overseas markets at prices well beneath those in japan This practice is best referred to as ?

   A. Orderly marketing
   B. trigger pricing
   C. domestic content pricing
   D. dumping

7. When a tax distorts incentives to buyers and sellers so that fewer goods are produced and sold than otherwise the tax has ?

   A. caused a deadweight loss
   B. decreased equity
   C. generated no tax revenue
   D. increased efficiency

8. Suppose the economy is initially in long-run equilibrium Then suppose there is an increase in military spending due to rising international tensions According to the model of aggregate demand and aggregate supply what happens to prices and output in the long run ?

   A. Output falls; prices are unchanged from the initial value
   B. Price fall; output is unchanged from its initial value
   C. Output and the price level are unchanged from their initial values
   D. Prices rise; output is unchanged from its initial value

9. Suppose the economy is initially in long-run equilibrium Then suppose there is an increase in military spending due to rising international tensions According to the model of aggregate demand and aggregate supply what happens to prices and output in the short run ?

   A. Price fall; output rises
   B. Price fall; output falls
   C. Price rise; output fall
   D. Price rise; output rise

10. When aggregate supply exceeds aggregate demand ?

    A. Business inventory accumulate
    B. Unemployment exists
    C. Price of consumer goods rise
    D. People save more than they intended to save