Economics Basics — Answer Key
Part A: Fix the Sentence
Each sentence has an error. Rewrite it correctly on the line.
1. Fix the sentence:
When a store has too many oranges, the demand is high.
Corrected: When a store has too many oranges, the supply is high.
Supply means how much of a product is available to sell. Demand is how much people want to buy — since the store already has lots of oranges sitting there, the correct word is supply.
2. Fix the sentence:
A firefighter sells a good when putting out a fire.
Corrected: A firefighter provides a service when putting out a fire.
Goods are physical objects you can hold, while services are helpful actions people do for others. Putting out a fire is an action, so it is a service, not a good.
3. Fix the sentence:
Spending means putting money away for the future.
Corrected: Saving means putting money away for the future.
Spending means using money right now to buy something, while saving means keeping it for later. Putting money away for the future is the definition of saving.
Part B: Fill in the Blank
Write the missing word or number on each line.
1. The amount of a product that a store has ready to sell is called the supply.
Supply is the total amount of something available for sale. When a store keeps shelves stocked with a product, that stock is its supply.
2. Using money to buy a snack at the school cafeteria is spending.
Spending means giving up money to get a good or service right now. Buying a snack is exchanging money for food, so it counts as spending.
3. A person who makes furniture to sell at a market is a producer.
A producer creates or makes goods for others to buy. Because this person builds furniture to sell, they are producing goods for consumers.
4. How much people want a product is called demand.
Demand measures how badly shoppers want to buy something. When many people want the same product, economists say demand for it is high.
Part C: True or False?
Read each statement. Circle True or False.
1. A pencil you buy at a store is a service.
True False
False — a pencil is a physical object you can hold, which makes it a good. Services are actions done for you, not items you carry home.
2. When demand for a toy goes up, the price usually goes up too.
True False
True — when more people want the same toy but there are only so many to buy, sellers can charge more because shoppers are willing to pay it.
3. Putting part of your birthday money in a jar is an example of saving.
True False
True — saving means keeping money safely for later rather than spending it now. Dropping birthday money into a jar does exactly that.