Economics Chapter 9 - The Price Puzzle: What Drives the Market

Vocabulary flashcards defining fundamental market concepts including demand, supply, laws of supply and demand, complementary goods, and supply factors based on Economics Chapter 9.

Demand

The quantity of a product that people are willing and able to buy at a particular price.

Market Demand

The total quantity of a good demanded by all buyers in a market.

Supply

The quantity of a product that sellers are willing and able to sell (offer) at a particular price.

Complementary Goods

Goods that are generally used together.

Inverse Relationship (Price and Demand)

The relationship where an increase in the price of a product causes its quantity demanded to decrease, and a decrease in price causes quantity demanded to increase.

Law of Demand

The rule describing the inverse relationship between price and quantity demanded: as price rises, quantity demanded falls; as price falls, quantity demanded rises.

Law of Supply

The rule stating that there is a direct relationship between the price of a product and its quantity supplied, assuming other factors remain constant, as demonstrated when higher prices (such as ₹50 to ₹150 per kg for mangoes) lead to higher supplied quantities (1 kg to 3 kg).

Price of Related Goods

A factor affecting supply wherein producers alter the supply of a product depending on the price and profitability of alternative goods, such as growing more chickpeas when chickpea prices are high and wheat prices are low.

Number of Sellers

A factor affecting supply where an increase in market sellers increases total available product quantity, and a decrease in sellers reduces market supply.

Technology (Factor of Supply)

A factor affecting supply where technological improvements, such as advanced irrigation and weather-monitoring technology, reduce production costs and allow producers to increase output and supply.