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