Economics: Supply & Demand — Answer Key
Part A: Fix the Sentence
Each sentence has an error. Rewrite it correctly on the line.
1. Fix the sentence:
When the price of a toy goes up, more people want to buy it.
Corrected: When the price of a toy goes up, fewer people want to buy it.
The corrected sentence is: "When the price of a toy goes up, fewer people want to buy it.". The original sentence "When the price of a toy goes up, more people want to buy it." contained an error that needed to be fixed.
2. Fix the sentence:
A surplus happens when there is more demand than supply.
Corrected: A surplus happens when there is more supply than demand.
The corrected sentence is: "A surplus happens when there is more supply than demand.". The original sentence "A surplus happens when there is more demand than supply." contained an error that needed to be fixed.
3. Fix the sentence:
Supply means how much consumers want to buy a product.
Corrected: Supply means how much producers are willing to sell a product.
The corrected sentence is: "Supply means how much producers are willing to sell a product.". The original sentence "Supply means how much consumers want to buy a product." contained an error that needed to be fixed.
Part B: Fill in the Blank
Write the missing word or number on each line.
1. How much people want to buy a product at a given price is called demand.
Demand is the quantity of a good or service that consumers are willing and able to buy at a given price.
2. When demand is high and supply is low, prices usually rise.
High demand + low supply = competition among buyers → prices increase.
3. A person or company that makes products to sell is called a producer.
Producers create or provide goods and services. They supply the market.
4. A person who buys or uses goods and services is called a consumer.
Consumers buy or use goods and services. Their purchasing decisions drive demand.
Part C: Short Answer
Answer each question in one or two complete sentences.
1. If a popular toy is hard to find during the holidays, what happens to its price and why?
Sample answer: The price goes up because there is high demand from many shoppers but low supply of the toy. When demand is greater than supply, sellers can charge more.
Supply and demand: limited supply + high demand = higher prices.
2. What is the difference between a producer and a consumer?
Sample answer: A producer is a person or company that makes or provides goods and services. A consumer is a person who buys or uses those goods and services.
Producers supply; consumers demand. Both roles interact in a market economy.