Demand and Supply
Main idea: Demand includes only those
people who are willing and able to buy.
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Vocabulary
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Demand
Supply
Market
Voluntary exchange
Law of demand
Quantity demanded
Real income effect
Substitution effect
Utility
Marginal utility
Law of diminishing marginal utility
Notes
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 What is demand?
 What does the law of demand state?
 The three factors that explain the inverse relationship
between quantity demanded and price include:
 A.
 B.
 C.
Main Idea: Prices go up and down
depending on demand.
vocabulary
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 Demand schedule
 Demand curve
 Complementary good
 Elasticity
 Price elasticity of demand
 Elastic demand
 Inelastic demand
Notes
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 What does a downward sloping demand curve
signify?
 What factors affect demand?
 What does it mean for the demand for a good to be
“elastic” or “inelastic”?
Main idea: The law of supply is geared
towards making profits
vocabulary
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 Law of supply
 Quantity supplied
 Supply schedule
 Supply curve
 Technology
 Law of diminishing returns
Notes

 What does the law of supply say about the quantity
supplied?
 What does an upward sloping supply curve show?
 What 4 factors determine supply in a market
economy?
Main Idea: Shortages occur when the
quantity demanded is larger than the
quantity supplied at the current price.
Vocabulary

 Equilibrium price
 Shortage
 Surplus
 Price ceiling
 Rationing
 Black market
 Price floor
Notes

 What do prices serve as in a free enterprise system?
 How does a shortage affect prices?
 How do surpluses affect prices?
 How does a price ceiling affect supply?
 How does a price floor effect things like minimum
wage?
Business Organizations
Main Idea: You can take your ideas and start
your own business.
Vocabulary

 Entrepreneur
 Startup
 Small business incubator
 Inventory
 receipts
Notes

 Why do people start their own businesses?
 How can those people get help?
 What basic elements must every business consider?
Main Idea: The two most common ways to
organize business is sole proprietorships and
partnerships.
Vocabulary

 Sole proprietorship
 Proprietor
 Unlimited liability
 Assets
 Partnership
 Limited partnership
 Joint venture
Notes

 What is the most basic business organization?
 What are the advantages of sole proprietorships?
 What are the disadvantages of sole proprietorships?
 What does a legally binding partnership agreement
do?
 What are the advantages and disadvantages of a
limited partnership?
Main idea: Corporations disperse profit to
shareholders
vocabulary

 Corporation
 Stock
 Limited liability
 Articles of incorporation
 Corporate charter
 Common stock
 Dividend
 Preferred stock
 franchise
Notes
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 What rights do corporations have?
 What is the major advantage of a corporation?
 What is a major disadvantage of a corporation?
 How is a corporation formed?
 How do franchises work?
Main Idea: Suppliers want as little
competition as possible.
Vocabulary

 Market Structure
 Perfect competition
Notes

 What are the 4 basic market structures in the United
States?
 Describe perfect competition:
 How are agricultural products described as perfect
competition?
 How does society benefit from perfect competition?
Main Idea: Advertising plays a major role in
two types of market structures.
Vocabulary
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 Monopoly
 Barriers to entry
 Economies of scale
 Patent
 Copyright
 Oligopoly
 Product differentiation
 Cartel
 Monopolistic competition
Notes
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 How is a monopoly protected?
 What are the 4 types of monopolies?
 What are the advantages of Natural Monopolies?
 How do competitors use product differentiation?
 Why is advertising important?
Main Idea: The US supports competition in
the economy.
vocabulary
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 Interlocking directorate
 Antitrust legislation
 Merger
 Conglomerate
 deregulation
Notes

 Why did the government pass antitrust legislation?
 What are the two famous pieces of antitrust
legislation?
 List the 3 types of mergers
 What do federal regulatory agencies do?
 What does deregulation help achieve?