Introduction to Economics
Intermediate English listening exercise ยท University Lectures
Transcript
Professor: Good morning, everyone. Today we are going to explore the fundamentals of microeconomics. Can anyone tell me what supply and demand means? Student: It is the relationship between how much of a product is available and how much people want to buy. Professor: Excellent. Supply refers to the quantity of a good that producers are willing to sell at a given price. Demand, on the other hand, represents how much consumers are willing to purchase. Student: So when demand goes up but supply stays the same, prices increase? Professor: Precisely. That is what we call a shortage. The market adjusts through price changes until a new equilibrium is reached. Student: What happens when there is too much supply? Professor: That creates a surplus, which typically drives prices down. This self-correcting mechanism is what Adam Smith called the invisible hand of the market.
Comprehension questions
- What happens when demand increases but supply stays the same?
- What did Adam Smith call the self-correcting mechanism?
- What is created when there is too much supply?
- What does supply refer to in microeconomics?
- What happens when there is a shortage in the market?