Economics: Supply & Demand — Answer Key
Part A: Fill in the Blank
Write the missing word or number on each line.
1. When many businesses sell the same type of product, it is called competition.
Competition exists when multiple sellers offer similar products, driving them to improve quality and lower prices.
2. The money a business earns after subtracting all costs is called profit.
Profit = revenue − costs. Profit motivates entrepreneurs to start and grow businesses.
3. A person who starts a new business and takes risks is an entrepreneur.
Entrepreneurs identify needs, start businesses, and take financial risks hoping to make a profit.
4. When workers focus on one specific task to be more efficient, it is called specialization.
Specialization (division of labor) allows workers to master a task, increasing productivity and efficiency.
5. The price where supply and demand are equal is the equilibrium price.
At the equilibrium price, the quantity supplied equals the quantity demanded — the market 'clears.'
6. When there is more demand than supply, the result is a shortage.
Shortage = demand > supply. Buyers want more than sellers can provide at the current price.
7. Buying goods from another country is called importing.
Importing means buying goods produced in another country. The US imports products it doesn't produce cheaply.
8. Selling goods to another country is called exporting.
Exporting means selling domestically produced goods to other countries.
9. Competition among sellers usually keeps prices lower for buyers.
When businesses compete, they lower prices or improve quality to attract customers.
Part B: Matching
Match each item on the left to the correct answer on the right.
1. Match each item to its correct answer.
Producer
→ makes goods to sell
starts a new business
Consumer
→ buys goods and services
more supply than demand
Entrepreneur
→ starts a new business
makes goods to sell
Surplus
→ more supply than demand
buys goods and services
Producer=makes goods(idx2); Consumer=buys goods(idx3); Entrepreneur=starts a business(idx0); Surplus=more supply than demand(idx1)