| A | B |
|---|
| demand | the amount of a good or service that consumers are able and willing to buy at various possible prices during a specified time period |
| supply | the amount of a good or service that producers are able and willing to sell at various prices during a specified time period |
| market | the process of freely exchanging goods and services between buyers and sellers |
| voluntary exchange | a transaction in which a buyer and a seller exercise their economic freedom by working out their own terms of exchange |
| law of demand | economic rule stating that the quantity demanded and price move in opposite directions |
| quantity demanded | the amount of a good or service that a consumer is willling and able to purchase at a specific price |
| real income effect | economic rule stating that individuals cannot keep buying the same quantity of a product if its price rises while their income stays the same |
| substitution effect | economic rule stating that if two items satisfy the same need and the price of one rises, people will buy the other |
| utility | the abiliey of any good or service to satisfy consumer wants or needs |
| marginal utility | an additional amount of satisfaction |
| law of diminishing marginal utiltity | rule stating that the additional satisfaction a consumer gets from purchasing one more unit of a product will lessen with each additional unit purchased |
