XII-7. Basic Supply and Demand
Warm-Up & Vocabulary
Key Vocabulary
- Supply (n.): The total amount of a specific good or service that is available to consumers from producers.
- Demand (n.): Consumer desire and willingness to pay a price for a specific good or service.
- Equilibrium (n.): The state in which economic forces such as supply and demand are balanced.
- Scarcity (n.): The fundamental economic problem of having seemingly unlimited human wants in a world of limited resources.
- Inflation (n.): A general increase in prices and fall in the purchasing value of money over time.
Vocabulary Quiz: Matching
Identifying Cause and Effect in TOEFL iBT Reading
Cause-and-effect relationships are foundational to academic texts, especially in economics. In TOEFL iBT Reading, you will frequently be tested on why an event happened (the cause) and what happened as a result (the effect). Recognizing explicit transition markers prevents misinterpretation of complex economic mechanisms.
Core Cause-and-Effect Markers
- Indicating Causes: because, since, as, due to, owing to, is triggered by, stems from.
- Indicating Effects: therefore, consequently, as a result, thus, leads to, results in, is responsible for.
Worked Example
Supply and Demand Dynamics
Because a severe drought destroyed half of the nation’s coffee crop, coffee suppliers experienced a sharp drop in available inventory. Consequently, coffee prices rose significantly in retail markets across the country, which in turn reduced consumer demand.
- Cause: A severe drought destroyed half of the nation’s coffee crop (triggering low supply).
- Effect 1 / Intermediate Result: Coffee prices rose significantly in retail markets.
- Effect 2 / Final Result: Consumer demand decreased.
Skill Practice
Practice Quiz 1: Fill in the Blank
Practice Quiz 2: True or False
Read the passage snippet and evaluate the statements regarding cause and effect.
Passage Snippet:
When the price of a substitute good decreases, consumers naturally shift their purchases away from the original product. As a result, the market demand curve for the original product shifts to the left.
Practice Quiz 3: Multiple Choice
Read the sentence below and identify the correct cause-and-effect relationship.
Due to unexpected supply chain disruptions in the semiconductor industry, automobile manufacturers had to temporarily halt vehicle production.