GED Social Studies : Supply and Demand

Study concepts, example questions & explanations for GED Social Studies

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Example Questions

Example Question #11 : Economic Principles

If there is a surplus of a product and little demand for it, the price of the product can be expected to __________

Possible Answers:

increase dramatically.

increase slightly.

fall slightly.

stay roughly the same.

fall dramatically.

Correct answer:

fall dramatically.

Explanation:

The law of supply and demand states that if the supply of something goes up and the demand for something goes down, then the price will fall significantly. A surplus means having more of something than is needed. For example, a company produces 100,000 dolls for the holiday season. There is a demand for only 20,000 at the price for which the company wants to sell them. This leaves a surplus of 80,000. If the company wants to increase the demand for the rest of the dolls they will have to lower the price they are willing to sell them at dramatically. This is the law of supply and demand.

Example Question #2 : Supply And Demand

Economic equilibrium occurs when __________.

Possible Answers:

supply matches demand

the economy is in a depression

supply outstrips demand

the economy is in a recession

supply cannot meet demand

Correct answer:

supply matches demand

Explanation:

The term Economic equilibrium refers to a state where the supply of a product is equal to the demand for the product. This is an ideal situation that would in theory keep prices and profits consistent. When supply outstrips demand, the price of something will fall, and when the supply cannot meet the demand, the price of something will rise.

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