Question

match the correct definition with each term

a good that is used with another good; price of one affects demand for the other. - substitute

points where qs=qd. - equilibrium

prices above equilibrium where qs is greater than qd, result in this. - surplus

a good used in place of another good; price of one affects demand for the other. - complement

prices below equilibrium where qs is less than qd, result in this. - shortage

Explanation:

Analyze definitions of goods

We evaluate the definitions related to types of goods in microeconomics.

• The first definition, "a good that is used with another good; price of one affects demand for the other," describes a complement (e.g., milk and cereal).
• The fourth definition, "a good used in place of another good; price of one affects demand for the other," describes a substitute (e.g., tea and coffee).

This applies the concept of Substitutes and Complements.

Analyze market state definitions

We evaluate the definitions related to market conditions and price levels.

• "points where QS=QD" (Quantity Supplied equals Quantity Demanded) defines equilibrium. This applies the concept of Market Equilibrium.
• "prices above equilibrium where QS is greater than QD, result in this" describes a surplus.
• "prices below equilibrium where QS is less than QD, result in this" describes a shortage.

These apply the concept of Surplus and Shortage.

Match terms to definitions

By aligning each definition on the left with its correct term on the right:

1. "a good that is used with another good; price of one affects demand for the other." $

ightarrow$ complement

1. "points where QS=QD." $

ightarrow$ equilibrium

1. "prices above equilibrium where QS is greater than QD, result in this." $

ightarrow$ surplus

1. "a good used in place of another good; price of one affects demand for the other." $

ightarrow$ substitute

1. "prices below equilibrium where QS is less than QD, result in this." $

ightarrow$ shortage

Answer:

• a good that is used with another good; price of one affects demand for the other. $

ightarrow$ complement

• points where QS=QD. $

ightarrow$ equilibrium

• prices above equilibrium where QS is greater than QD, result in this. $

ightarrow$ surplus

• a good used in place of another good; price of one affects demand for the other. $

ightarrow$ substitute

• prices below equilibrium where QS is less than QD, result in this. $

ightarrow$ shortage