Glossary Terms:

Supply and Demand, Lessons From Toy Fads.

Glossary terms from:
http://www.econedlink.org/e961


Alternative

One of many choices or courses of action that might be taken in a given situation.

Business

Any activity or organization that produces or exchanges goods or services for a profit.

Consumers

People who use goods and services to satisfy their personal needs and not for resale or in the production of other goods and services.

Demand

The quantity of a good or service that buyers are willing and able to buy at all possible prices during a period of time.

Equilibrium Price

The price at which the quantity demanded by buyers equals the quantity supplied by sellers; also called the market-clearing price.

Goods

Tangible objects that satisfy economic wants.

Incentive

Any reward or benefit, such as money, advantage or good feeling, that motivates people to do something.

Law of Demand

As the price of a good or service rises (or falls), the quantity of that good or service that people are willing and able to buy during a certain period of time falls (or rises).

Law of Supply

As the price of a good or service that producers are willing and able to offer for sale during a certain period of time period rises (or falls), the quantity of that good or service supplied rises (or falls).

Price

The amount of money that people pay when they buy a good or service; the amount they receive when they sell a good or service.

Price Level

The weighted average of the prices of all goods and services in an economy; used to calculate inflation.

Producers

People and firms that use resources to make goods and services.

Product

A good or service that can be used to satisfy a want.

Production

A process of manufacturing, growing, designing, or otherwise using productive resources to create goods or services used to to satisfy a want.

Quantity Demanded

The amount of a good or service people will buy at a given price in a given period of time.

Quantity Supplied

The amount of a good or service sellers are willing and able to offer at a given price in a given period of time.

Sale

An exchange of goods or services for money.

Services

Activities performed by people, firms or government agencies to satisfy economic wants.

Shortage

The situation that results when the quantity demanded for a product exceeds the quantity supplied. Generally happens because the price of the product is below the market equilibrium price.

Substitute

A good or service that may be used in place of another good or service; examples include tap water for bottled water (or vice versa) and movies for concerts (or vice versa).

Supply

The amount of a good or service that producers are willing and able to offer for sale at each possible price during a given period of time.

Surplus

The situation that results when the quantity supplied of a product exceeds the quantity demanded. Generally happens because the price of the product is above the market equilibrium price.