Virginia Tech EC 201 EC201 Chapter 3 Assignment Sheet 1)Explain the laws of Demand and Supply

Economics Jun 24, 2021

Virginia Tech

EC 201

EC201 Chapter 3 Assignment Sheet

1)Explain the laws of Demand and Supply. Show a graph of the two (supply and demand) and Equilibrium Price on the graph. Label quantity and price on the x and y axis of the graph.

The law of demand states that “the quantity of a good demanded in a given time period increases as its price falls, ceteris paribus.” More products will be sold at lower prices, and vice versa. The law of supply states that “the quantity of a good supplied in a given time period increases as its price increases, ceteris paribus.” Larger quantities will be offered at higher prices, and vice versa.

What is the incentive for producers to produce efficiently in a market economy?
What does ceteris paribus mean?

What is market demand?

Given the law of demand, what would you expect to happen when the price of gas increases? In your personal situation does this really happen? Why or why not?

When the government puts a ceiling on the prices of a good (such as electricity) what will happen?

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