| A | B |
|---|
| Supply | The amount of goods producers are willing and able to produce and sell at a given price during a certain period of time. |
| Demand | A consumer’s willingness and ability to buy products at a given price during a certain period of time. |
| Seller's Market | The market that occurs when prices are high but demand is still high. |
| Buyer's Market | The type of market that occurs when demand is low and there is plenty of supply available. |
| Law of Supply | With all other factors being equal, as the price of a product increases, the quantity supplied will increase, and as the price of a product decreases, the quantity supplied will decrease. |
| Law of Demand | With all other factors being equal, as the price of a product increases, consumer demand for the product decreases, and as the price of a product decreases, consumer demand for the product increases. |
| Elasticity | The degree to which demand for a product is affected by its price. |
| Elastic Demand | For example, when the price of a cheeseburger is reduced, demand may increase. If the price of a cheeseburger increases, demand may decrease. |
| Inelastic Demand | Refers to how changes in the price of a product have very little affect on the demand for that product. |
| Surplus | When supply exceeds demand. |
| Shortage | When demand exceeds supply, also referred to as scarcity. |
| Equilibrium | Occurs when supply and demand are equal and bothe the supplier and consumer are satisfied. |
| Substitute availability | My demand for Coke is elastic because if Coke is not on sale, I can buy Pepsi. |
| Brand Loyalty | Many customers will only purchase a certain brand. In general, brand loyal customers will accept no substitutes. In this situation, demand becomes inelastic. |
| Price relative to income | For example, if the price of Orbit gum increases from $0.99 to $1.29, this has little impact on the customer’s budget. In this case the demand is inelastic. |
| d. Luxury vs. necessity (want vs. need) | For example: purchasing medicine for a sick child is inelastic where as extra pleasures or convenient items are usually elastic. |
| Urgency of purchase | For example, if a car breaks down the owner may need to get it fixed ASAP and demand is inelastic. |
