Lesson 3 quiz - The Law of Demand states that there is a(n)...

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The Law of Demand states that there is a(n) inverse relationship between price and quantity. If price increases, a consumer will buy less if nothing else changes. The market is cleared by finding a price at which producers are willing and able to supply and consumers are willing and able to buy The market clearing price where the quantity demanded by consumers equals the quantity supplied by producers. If consumers expect prices to in crease in the future, they would increase their demand for an item now If people have more income, they will purchase more of a “normal”good. Pure competition is characterized by a very large number of both independent buyers and independent sellers resulting in the maximum possible competition. As a person continues to consume more of an item, at some point s/he will get less additional satisfaction (utility). Allocation of resources within the capitalistic system is accomplished through a market approach where buyers and sellers meet. A minimum wage law (a price floor) increases the quantity of labor supplied, but reduces the quantity of labor demanded resulting in a(n) surplus of labor. When producers' costs in crease, there will be less product (shift left) at each price brought to the market. The Law of Supply concludes that if prices de crease, then the quantity supplied will decrease. If there is a surplus, suppliers will decrease their prices until the market price comes to equilibrium where quantity supplied is equal to the quantity demanded.
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Lesson 3 quiz - The Law of Demand states that there is a(n)...

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