Vocab
What explains how prices are set in markets?
Supply and demand
What do people typically do when a product goes on sale for cheaper than it normally costs?
They buy it
When sellers can get a higher price for a good, what does this do to production?
Increases it
It decreases
Price
What is it called when demand is greater than supply and buyers compete for limited goods.
Shortage
What term describes something that makes people want more or less of a product?
Demand shifter
What term describes something that makes sellers produce more or less of a product?
Supply shifter
What happens to prices if many kids set up lemonade stands?
They decrease
What term describes how much of something that sellers are willing to make and sell.
Supply
What is it called when supply is greater than demand and there is more product than buyers want?
What do people do if they expect the price of something to be higher in the future?
Buy it now
What happens to price and supply when many new sellers enter a market?
Supply increases and prices fall
What happens to prices when a popular video game is scarce?
Prices are high
What term describes how much people want a product or service.
Demand
What is a demand shifter?
Something that makes people want more or less of a product.
If a good substitute becomes cheaper, what happens to the demand for the original product?
What effect does higher taxes have on supply?
It reduces it
When prices are too high and supply exceeds demand, what do sellers often to to sell leftover goods?
Reduce prices
What is a supply shifter?
Something that makes sellers produce more or less of a product.
What is opportunity cost?
The next best choice you give up when you pick one option over another.
Give an example of a demand shifter.
Change in tastes
Price of related goods
Population size
Expectations about future prices
What do sellers do when they expect to be able to charge higher prices for an item in the future?
Sell less now
Name 3 things that supply and demand help people make smarter choices about.
Buying, selling, and saving
What term describes the price where the amount buyers want equals the amount sellers offer.
Equilibrium