| A | B |
|---|
| economic concept that deals with how much demand varies according to chanages in price | price elasticity of demand |
| the amount of a product producers are willing to supply at different prices represented graphically. | supply curve |
| economic rule stating that after some point, adding units of a factor of production (such as labor) to all other factors of production (such as equipment) increase total output for a time; after a certain point, the extra output for each additional unit will begin to decrease. | law of diminishing returns |
| how people in the marketplace decide what to buy and at what price | demand |
| how people who want to sell things decide how much to sell (quantity) and at what price | supply |
| the amount of goods and services people can buy with their money | purchasing power |
| freely chosen action between buyers and sellers of goods and services | marketplace |
| all consumers collectively, or as a group, have a great influence in the price of all goods and services | market economy |
| situation occurring when supply is greater than demand | surplus |
| situation that occurs when, at the going price, the quantity demanded is greater than the quantity supplied | shortage |
| price of a product or service at which the amount producers are willing to supply is equal to the amount | equilibrium price |
| use of science to develop new products and new methods for producing and distributing goods and services | technology |
| economic principle stating that if two items satisfy the same need and the price of one rises, people will buy the other | substitution 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; can also work in the opposite way- if the price of a product decreases and income remains the same, purchasing power is increased and the amount of product purchases will likely increase | real income effect |
| power that a good or service has to satisfy a want | utility |
| how people react to changing prices in terms of the quantities of a good or service that they purchase | law of demand |
| buyer and seller exercise their economic freedoms by working out on their own the terms of an exchange | voluntary exchange |
