Economics Vocabulary Quiz

a place where buyers and sellers meet to exchange goods

and services

• market

• surplus

• shortage

a situation that occurs in markets when both the buyer

and the seller of a product willingly engage in market

transactions and are made better off by the transaction

• voluntary exchange

• quantity

• price

the information that guides a how resources are used and

helps businesses decide what and how much to produce

(rising prices mean a shortage; lowered prices mean over-

production)

• price signals

• Law of Demand

• surplus

the amount of goods that consumers want to buy

• demand

• quantity

• equilibrium price

When the price goes up, people buy less; when the price

goes down, people buy more.

• Law of Demand

• price

• market

the amount of goods produced or available (for sale)

• supply

• voluntary exchange

• price signals

If the price of a product goes up businesses have an

incentive to produce more; if the price goes down they

produce less.

• Law of Supply

• demand

• quantity

when the price is too high and producers want to create

the product but consumers don't want to buy it (too much

left)

• surplus

• price signals

• market

when the price is too low and the producers create too little

of the product to meet consumer demand (not enough)

• shortage

• equilibrium quantity

• price

the price at which the quantity of the product offered is

equal to the quantity of the product in demand

• equilibrium price

• shortage

• quantity