| A | B |
|---|
| Buyer’s market | The best time for consumers to buy; characterized by large supply, small demand, and low prices |
| Consumers | People who use goods and services to satisfy their wants |
| Demand | The quantity of a good or service that buyers are ready to buy at a given price at a particular time |
| Demand price | The maximum price buyers are willing and able to pay for a product |
| Equilibrium price | The point at which the quantity of a product that buyers want to buy is equal to the quantity that sellers are willing to sell at a certain price; equal to both the demand price and the supply price |
| Excess demand | The situation that exists when demand is greater than supply |
| Excess supply | The situation that exists when supply is greater than demand |
| Incentives | A function of relative prices that encourages producers to change and reallocate their resources; motivators |
| Market | Any circumstances under which buyers and sellers exchange goods or services for a price |
| Market price | Actual price that prevails in a market at any particular moment |
| Market-clearing price | Equilibrium price |
| Price | The amount of money paid for a good, service, or resource |
| Price ceiling | A maximum legal price that businesses can charge for certain products |
| Price controls | Government restrictions on the minimum and/or maximum prices of certain products |
| Price information | A function of relative prices that is necessary for consumers, producers, and resource owners to make important economic decisions; data concerning value/cost |
| Producers | The people who make or provide goods and services |
| Profit | Monetary reward a business owner receives for taking the risk involved in investing in a business; income left once all expenses are paid |
| Rationing | A function of relative prices that determines who gets the goods and services produced; determining how scarce resources will be distributed |
| Relative price | One price compared to another; the ratio between two prices |
| Resource owners | Those who provide human resources, natural resources, and capital goods in order for production to take place |
| Seller’s market | The best time for producers to sell; characterized by large demand, small supply, and high prices |
| Substitution effect | A phenomenon that occurs when changes in relative prices cause buyers to replace the purchase of one product with another |
| Supply | The quantity of a good or service that sellers are able and willing to offer for sale at a specified price in a given time period |
| Supply price | The minimum price producers are willing and able to receive for a product |
| Value | The amount of satisfaction a good or service will provide a customer |
