Which of the following is correct with respect to the issue of supply and demand?
A) A demand curve shows that consumers usually demand products of higher quality.
B) A supply curve shows that businesses will supply more units of a product, but will lower the level of product quality.
C) It is difficult to achieve an equilibrium price.
D) When the quantity demanded exceeds the amount supplied, businesses shut down.
E) None of the statements are correct.

Question

Quizplus · Accepted Answer

None of the statements are correct. A demand curve does not necessarily show that consumers demand products of higher quality; it shows the quantity of a product that consumers are willing to buy at a given price. A supply curve does not necessarily show that businesses will lower the level of product quality; it shows the quantity of a product that businesses are willing to supply at a given price. Achieving an equilibrium price is the goal of supply and demand analysis, and when the quantity demanded exceeds the amount supplied, businesses do not necessarily shut down - they may raise the price or increase production to meet demand.

Which of the Following Is Correct with Respect to the Issue