KEY CONCEPTS

Match each of the terms on the left with its definition on the right. Click on the term first and then click on the matching definition. As you match them correctly they will move to the bottom of the activity.

Question

markets
price system
willingness-to-pay
demand
law of demand
demand curve
demand schedule
horizontal summation
determinants of demand
normal good
inferior good
substitute goods
complementary goods
change in demand
change in quantity demanded
supply
law of supply
supply curve
determinants of supply
change in supply
change in quantity supplied
equilibrium
equilibrium price
equilibrium quantity
surplus
shortage
Holding all other relevant factors constant, as price increases, quantity demanded falls, and as price decreases, quantity demanded rises.
Market forces are in balance when the quantities demanded by consumers just equal the quantities supplied by producers.
The output that results when quantity demanded is just equal to quantity supplied.
A table that shows the quantity of a good a consumer purchases at each price.
A graphical illustration of the law of supply, which shows the relationship between the price of a good and the quantity supplied.
A good for which an increase in income results in rising demand.
A good for which an increase in income results in declining demand.
Occurs when the price of the product changes, shown as a movement along an existing supply curve.
Goods consumers will substitute for one another. When the price of one good rises, the demand for the other good increases, and vice versa.
Institutions that bring buyers and sellers together, so they can interact and transact with each other.
Nonprice factors that affect demand, including tastes and preferences, income, prices of related goods, number of buyers, and expectations.
Occurs when one or more of the determinants of supply change, shown as a shift in the entire supply curve.
Occurs when the price of the product changes, shown as a movement along an existing demand curve.
The process of adding the number of units of the product purchased or supplied at each price to determine market demand or supply.
An individual’s valuation of a good or service, equal to the most an individual is willing and able to pay.
The maximum amount of a product that sellers are willing and able to provide for sale over some time period at various prices, holding all other relevant factors constant (the ceteris paribus condition).
The price at which the quantity demanded is just equal to quantity supplied.
Goods that are typically consumed together. When the price of a complementary good rises, the demand for the other good declines, and vice versa.
Occurs when one or more of the determinants of demand changes, shown as a shift in the entire demand curve.
Occurs when the price is above market equilibrium, and quantity supplied exceeds quantity demanded.
A name given to the market economy because prices provide considerable information to both buyers and sellers.
Occurs when the price is below market equilibrium, and quantity demanded exceeds quantity supplied.
A graphical illustration of the law of demand, which shows the relationship between the price of a good and the quantity demanded.
The maximum amount of a product that buyers are willing and able to purchase over some time period at various prices, holding all other relevant factors.
Holding all other relevant factors constant, as price increases, quantity supplied rises and as price declines, quantity supplied falls.
Nonprice factors that affect supply, including production technology, costs of resources, prices of related commodities, expectations, number of sellers, and taxes and subsidies.
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