Supply & Demand Word Search
Find 10 essential supply and demand terms. Click any word to understand the fundamental forces that drive prices and markets in the US economy.
Economics Term
Find 10 essential supply and demand terms. Click any word to understand the fundamental forces that drive prices and markets in the US economy.
Study these terms before or after solving the puzzle. Each definition includes a real-world US example.
Supply refers to the total amount of a product or service that producers are willing and able to offer for sale at various prices. The law of supply states that as price increases, producers are willing to supply more.
During the COVID-19 pandemic, global semiconductor supply collapsed as factories shut down. This supply shock halted production of PlayStation 5 consoles, cars, and countless other products.
Demand refers to the quantity of a good or service that consumers are willing and able to purchase at various prices. The law of demand states that as price decreases, the quantity demanded increases.
During COVID-19, demand for home office equipment surged as millions worked remotely. Sales of webcams, monitors, and ergonomic furniture skyrocketed, causing prices to rise dramatically.
Market equilibrium is the point at which the quantity supplied equals the quantity demanded, resulting in a stable market price. External shocks disrupt this balance, causing prices to adjust.
The COVID-19 pandemic disrupted housing equilibrium as demand surged while supply remained constrained, sending home prices up 40% between 2020 and 2022.
Price elasticity of demand measures how sensitive consumers are to price changes. Elastic demand drops sharply with price increases; inelastic demand changes little despite price changes.
Gasoline demand is notably inelastic in the US — when gas prices doubled in 2022, Americans reduced driving by only about 5–8% because most have no easy alternative to driving to work.
A shortage occurs when the quantity demanded exceeds the quantity supplied at the current market price. Shortages are often caused by sudden demand surges or supply disruptions.
The 2020–2022 consumer goods shortage began when COVID-19 panic buying disrupted normal purchasing patterns, revealing the fragility of just-in-time inventory systems.
A surplus occurs when the quantity supplied exceeds the quantity demanded at the current market price. Surpluses cause prices to fall as producers compete to sell excess inventory.
In April 2020, oil prices briefly went negative — an extreme surplus — because storage facilities were full. West Texas Intermediate crude fell to -$37.63 per barrel.
Scarcity is the fundamental economic problem: human wants are unlimited, but the resources available to satisfy them are finite. Because of scarcity, individuals and societies must make choices about resource allocation.
Organ donation illustrates scarcity — about 100,000 Americans await organ transplants at any time, but only around 40,000 transplants are performed annually because organs are scarce.
A market is any mechanism through which buyers and sellers interact to exchange goods, services, or financial instruments. Competitive markets tend to allocate resources efficiently.
The New York Stock Exchange handles over $20 billion in daily trading volume, matching buyers and sellers of company shares — the world's largest equities market.
When demand consistently exceeds supply across the economy, prices rise — causing inflation. Demand-pull inflation occurs when consumers have more money to spend than there are goods and services to buy.
The 2021–2022 inflation surge was partly demand-pull: $5 trillion in COVID stimulus boosted spending while supply chains couldn't keep up, pushing inflation to a 40-year high of 9.1%.
Market competition occurs when multiple sellers offer similar products, giving buyers choices. Competition drives innovation, lowers prices, and improves quality. US antitrust laws exist to protect competition.
US airline deregulation in 1978 dramatically increased competition, causing average airfares to drop by more than 40% in real terms over the following decades as dozens of new carriers entered the market.