# Which Explains The Connection Between The Law Of Demand And Excess Demand?

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

1. The law states that price decreases lead to greater demand and limited supply, which occur during excess demand.
2. The law states that price increases lead to greater demand and limited supply, which occur during excess demand.
3. The law states that price decreases lead to greater supply and equilibrium, which occurs during excess demand.
4. The law states that price increases lead to greater supply and equilibrium, which occurs during excess demand.

Answer: The law states that price decreases lead to greater demand and limited supply, which occurs during excess demand.

## Explanation

The law of demand states that a decreased in price leads to an increases in demand and limited supply, which occurs during excess demand.

Both excess supply and excess demand are a result of:

equilibrium.
disequilibrium.
overproduction.
elasticity.

Disequilibrium.

On a graph, an equilibrium point is where:

a supply curve and a demand curve meet.
a supply curve is higher than a demand curve.
the supply and demand curves head up.
the supply and demand curves head down.

A supply curve and a demand curve meet.

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

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

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

The graph shows excess supply.

Which needs to happen to the price indicated by p2 on the graph in order to achieve equilibrium?

It needs to be increased.
It needs to be decreased.
It needs to reach the price ceiling.
It needs to remain unchanged.

It needs to be decreased.

The graph shows a point of equilibrium.

If the quantity supplied is greater than the quantity demanded, what must happen to the price in order to reach equilibrium?

The price of the product will increase to meet equilibrium.
The price of the product will decrease to meet equilibrium.
Supply and demand must be raised.
Supply and demand must be lowered.

The price of the product will decrease to meet equilibrium.

The graph shows excess demand.

Which explains why the price indicated by p2 on the graph is lower than the equilibrium price?

As prices fall, quantity demanded goes up.
As prices fall, quantity demanded goes down.
As prices fall, quantity demanded stays the same.
As prices fall, quantity demanded disappears.

As prices fall, quantity demanded goes up.

The graph shows a point of equilibrium.

How many goods must be supplied to achieve equilibrium?

15
20
25
30

15

A car dealer who does not have enough customers for a supply of new cars faces:

equilibrium.
disequilibrium.
coordination.
excess demand.

Disequilibrium.

The graph shows a point of equilibrium.

What does “P” represent on the graph?

the point where equilibrium is achieved
the price at the equilibrium point
the average price of goods sold
the point where supply and demand drop

The price at the equilibrium point

Supply and demand coordinate to determine prices by working:

together.
competitively.
with other factors.
separately.

Together. 