7
QuizMultiple Choice

The Law of Supply

Question 7 • RAIL NCAA OC Economics 2027

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

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