| A | B |
|---|
| market | The exchange process between buyers and sellers. |
| demand | The quantity of a good or service that buyers are willing and able to buy at a price. |
| equilibrium price | The price at which the amount demanded equals the amount supplied; also called the market-clearing price. |
| shortage | Demand is greater than supply. Generally happens because the price is too low (below the equilibrium price). |
| supply | The quantity of a good or service that sellers are willing and able to produce for a price. |
| surplus | Demand is less than supply. Generally happens because the price is too high (above the equilibrium price). |
| market economy | The movement of money in which the prices of the products/services are decided by supply and demand. |
| When prices are high | Suppliers are willing to supply more |
| On a graph, price rise go with | Rise in supply "curve" |
| When prices are low | demand increases |
| On a graph, lower prices go with | increase in quantity demanded |
| On a graph where the supply "curve" & demand "curve" | meet is the equilibrium price |
| On a graph, any price above the equilibrium price will | cause a surplus |
| On a graph, any price below the equilibrium price will | cause a shortage |
| Why does a price above the equilibrium price cause a surplus? | Quantity demanded at that price is less than quantity supplied |
| Why does a price below the equilibrium price cause a shortage? | Quantity demanded at that price is more than quantity supplied |
