"Supply Creates Its Own Demand" Implies That

question 14

Multiple Choice

"Supply creates its own demand" implies that

• A) the very act of supplying a particular level of goods and services necessarily equals the level of goods and services demanded.
• B) the very act of demanding a particular level of goods and services necessarily equals the level of goods and services supplied.
• C) the government will buy up any surplus of goods and services in a country to avoid economic problems.
• D) the very act of supplying a particular level of goods and services will not necessarily equal the level of goods and services demanded.

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Definitions:

Industry Demand

The total demand for all the goods or services produced by a particular market sector.

Perfectly Elastic

Describes a situation where the quantity demanded or supplied responds infinitely or by unlimited quantity to any change in price, represented graphically as a horizontal line.

Quantity Demanded

The amount (number of units) of a product that a household would buy in a given period if it could buy all it wanted at the current market price.

Breaks Even

Achieves a situation where there is no profit or loss, synonymous with the concept of the break-even point but phrased differently.