Supply and Demand

Question 1

Substitute

Answer 1

A good or service that can be consumed in place of another. Typically a product with a similar function.

Question 2

Complement

Answer 2

A good or service that is improved when consumed with another. Includes goods and services that must be consumed together in order to create a benefit for consumers.

Question 3

Normal Good

Answer 3

A product of which consumers demand more as their incomes increase. Goods that are very sensitive increases in income are sometimes referred to as luxury goods.

Question 4

Inferior Good

Answer 4

A product of which consumers demand less as their incomes increase. Typically an inferior substitute for a more expensive normal good.

Question 5

Perfectly Elastic

Answer 5

Horizontal

Question 6

Perfectly Inelastic

Answer 6

Vertical

Question 7

Law of Supply

Answer 7

The law of economics that states that, ceteris pariubus, an increase in the price of a product cause an increase in the quantity supplied, and a decrease in price cause a decrease in the quantity supplied.