ECONOMICS
UNIT 2: MICROECONOMICS
PRE-STUDY GUIDE
As we go through the unit, fill out your study guide by
summarizing the questions that are given with the individual
standards. Some will be answered directly through class notes;
others will be answered through reading and critical thinking.
Throughout the unit we will have warm-up quizzes that will be
based on answering the questions in your study guide. The better
you keep up with this, the better you will do on the quizzes
SSEMI4
Business Organizations- pg 184-205
Market Competition Structures- pg 150-177
SSEMI1
Circular Flow Diagram- pg. 29-30, 42
Money- pg. 243
SSEMI2 and SSEMI3
Demand- pg 78-97
Supply- pg 100-121
Prices- pg. 124-145
GEORGIA PERFORMANCE STANDARDS
INTERNATIONAL ECONOMICS
Microeconomic Concepts
SSEMI4 The student will explain the organization and role of business
and analyze the four types of market structures in the U.S. economy.
a. Compare and contrast three forms of business organization—sole
proprietorship, partnership, and corporation.
Describe and list advantages and disadvantages for:
Sole Proprietorship __________________________________________________
__________________________________________________________________
Partnership ________________________________________________________
__________________________________________________________________
Corporation ________________________________________________________
___________________________________________________________________
b. Explain the role of profit as an incentive for entrepreneurs.
Explain how profit motive leads to all economic decisions of businesses: ___________________
______________________________________________________________________________
______________________________________________________________________________
c. Identify the basic characteristics of monopoly, oligopoly, monopolistic
competition, and pure competition.
Define and give an example of each of the following:
Perfect Competition: ____________________________________________________________
______________________________________________________________________________
Monopolistic Competition: ________________________________________________________
______________________________________________________________________________
Oligopoly: _____________________________________________________________________
______________________________________________________________________________
Monopoly: ____________________________________________________________________
______________________________________________________________________________
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SSEMI1 The student will describe how households, businesses, and
governments are interdependent and interact through flows of goods,
services, and money.
a. Illustrate by means of a circular flow diagram, the Product market; the
Resource (factor) market; the real flow of goods and services between and among
businesses, households, and government; and the flow of money.
Describe the interactions between households and firms in the factor market: ______________
______________________________________________________________________________
Describe the interactions between households and firms in the product market: ____________
______________________________________________________________________________
Explain how the government interacts with households and firms in the market: ____________
______________________________________________________________________________
______________________________________________________________________________
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b. Explain the role of money as a medium of exchange and how it facilitates
exchange.
Explain how money is used as a medium of exchange: __________________________________
______________________________________________________________________________
SSEMI2 The student will explain how the Law of Demand, the Law of
Supply, prices, and profits work to determine production and
distribution in a market economy.
a. Define the Law of Demand and the Law of Supply.
Law of Demand: ________________________________________________________________
Law of Supply: __________________________________________________________________
Normal Good: __________________________________________________________________
Inferior Good: __________________________________________________________________
Substitute: ____________________________________________________________________
Complement: __________________________________________________________________
b. Describe the role of buyers and sellers in determining market clearing price.
Equilibrium: ________________________________________________________________
Market Clearing Price: ________________________________________________________
Shortage: ___________________________________________________________________
Surplus: _______________________________________________________________________
c. Illustrate on a graph how supply and demand determine equilibrium price and
quantity.
Label on the graph the equilibrium point and market clearing price. Also,
show prices that would create a shortage and a surplus.
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d. Explain how prices serve as incentives in a market economy.
Explain how consumers (buyers) react to increasing and decreasing prices: _________________
______________________________________________________________________________
Explain how producers (firms) react to increasing or decreasing prices: ____________________
______________________________________________________________________________
SSEMI3 The student will explain how markets, prices, and competition
influence economic behavior.
a. Identify and illustrate on a graph factors that cause changes in market supply
and demand.
List the factors that cause Market Demand to Shift: ____________________________________
______________________________________________________________________________
Illustrate a decrease and increase in Demand on the graph below:
List the factors that cause Market Supply to shift: _____________________________________
______________________________________________________________________________
Illustrate a decrease and increase in Supply on the graph below:
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b. Explain and illustrate on a graph how price floors create surpluses and price
ceilings create shortages.
Explain what a price floor is and give an example: _____________________________________
_____________________________________________________________________________
Illustrate a price floor on the graph below:
Explain what a price ceiling is and give an example: ____________________________________
______________________________________________________________________________
Illustrate a price ceiling on the graph below:
c. Define price elasticity of demand and supply.
Elasticity of Demand: ____________________________________________________________
Factors that affect Elasticity of Demand: _____________________________________________
______________________________________________________________________________
Elasticity of Supply: _____________________________________________________________
Factors that affect Elasticity of Supply: ______________________________________________
______________________________________________________________________________
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