Pre-reading competency focus

In this unit read to learn about  the relationship between price and demand

Previewing: Scarcity is the basic economic problem that requires people to make choices about how to use limited resources. Buyers and sellers voluntarily interact in markets, and market prices are set by the  interaction of demand and supply.

Predicting: Think about what factors buyers and sellers consider during a voluntary exchange.

Vocabulary previewing: Match the words (A) and their definitions (B)

A

(1) demand, (2) supply, (3) market, (4) voluntary exchange, (5) law of demand, (6) quantity demanded, (7) real income effect, (8) substitution effect, (9) utility, (10) marginal utility, law of diminishing  marginal utility

B

(a) Amount of a good or service that consumers are able and willing to buy at

     various possible prices during a specified time period

(b) The ability of any good or service to satisfy consumer wants

(c) Process of freely exchanging goods and services between buyers and sellers

(d) Economic rule stating that the additional satisfaction a consumer gets from purchasing one more unit of a product will lessen with each additional unit purchased

(e) An additional amount of satisfaction

(f) Transaction in which a buyer and a seller exercise their economic freedom by working out their own terms of exchange

(g) Economic rule stating that if two items satisfy the same need and the price of onerises, people will buy the other

(h) Economic rule stating that the quantity demanded and price move in opposite directions

(i) Amount of a good or service that a consumer is willing and able to purchase at aspecific price

(j) Economic rule stating that individuals cannot keep buying the same quantity of aproduct if its price rises while their income stays the same

Skimming: Look through the text and find out what demand represents and what the law of demand explains.