Unit 2 Vocab (Page 1)

Question 1

Law of Demand:

Answer 1

The price of a good/service is inversely related with the quantity demanded, the lower the price the higher the quantity demanded and vice versa

Question 2

Law of Supply:

Answer 2

The price of a good/service is directly related with the quantity supplied, the lower the price the lower the quantity supplied and vice versa

Question 3

Equilibrium Price:

Answer 3

The market price where the quantity supplied is equal to the quantity demanded

Question 4

Income Effect:

Answer 4

When the price of a normal good decreases which increases a consumers purchasing power allowing them to buy more with their income

Question 5

Substitution Effect:

Answer 5

When the price of a good/service rises so consumers begin to look for/purchase alternative options

Question 6

Market Demand:

Answer 6

The quantity that all consumers are willing to buy for a specific good in a specific market

Question 7

Demand Schedule:

Answer 7

A table that shows the quantity of a good/service at different prices that consumers are willing to buy

Question 8

Supply Schedule:

Answer 8

A table that shows different quantities supplied of a good/service that suppliers are willing to sell at different prices

Question 9

Market Supply:

Answer 9

The quantity of goods/services that suppliers are willing to supply at a specific price or for a specific period of time