3
QuizMultiple Choice

Determining Market Price

Question 3 • (Galli)WCA 2221 Civics/Economics 1st nine weeks 26-27

Which explains the connection between the law of demand and excess demand?

Answer
A
The law states that decreases in price leads to greater quantity demanded and limited supply, which occurs during excess demand.
B
The law states that increases in price increases leads to greater quantity demanded and limited supply, which occurs during excess demand.
C
The law states that decreases in price leads to greater supply and equilibrium, which occurs during excess demand.
D
The law states that increases in price leads to greater supply and equilibrium, which occurs during excess demand.

Explanation

The law of demand says that when a good’s price falls, the quantity consumers demand rises. If supply is limited at that lower price, the quantity demanded can exceed the quantity supplied, creating excess demand. Choice A describes this connection.

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