Chapter 1- 7(Monopoly)
Vocab to know:
scarcity
efficiency
opportunity cost
competition
interest group
want
need
patent
mixed economy
central planned economy
specialization
safety net
consumer sovereignty
market failure
externality ( economic side effects of a good or service)
negative versus positive externality
laissez faire
guns or butter
traditional economy
product market
Understand:
examples of shortages
examples of opportunity costs
What is an entrepreneur?
What is the law of increasing cost and how is it connected to opportunity cost?
What does underutilization mean?
What type of economy does the U.S. have?
Which nations have a mixed economy with free market tendencies?
What are types of safety nets that governments can provide?
What are characteristics of the free enterprise system?
What is the business cycle?
what would be an example of a public good?
What is social security?
What is the free rider problem?
What makes China different from North Korea?
What are basic principles of American free enterprise?
What are some negative effects of government regulations?
What is medicare/Medicaid?
What are the factors of production?
How does a society decide who gets what goods and services ?
What are three of the key characteristics of the free enterprise economy in the United States?
How can we make the best economic choices?
Why do markets exist?
Chapter 4: Demand. EQ: How do we decide what to buy?
Chapter 4 Section 1: How does the law of demand affect quantity demanded?
Facts:
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demand is the desire to have a good and the ability to purchase it
As a good’s price rises, people demand less of that good; as a good’s price falls, people demand
more of that good
If price of a good increases, consumers will increase their demand for substitute goods; if the
price of a good decreases, consumers will decrease their demand for substitute goods.
Demand schedules show demand for a good across a range of prices.
Demand curves are graphic representations of demand schedules
Vocab: demand, law of demand, substitution effect, income effect, demand schedule, market demand
schedule, demand curve.
Chapter 4 Section 2: Why does the demand curve shift?
Facts:
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A demand curve shows how demand varies as price changes.
Changes in factors other than a good’s price can cause a good’s demand curve to shift to the rise
or to the left.
Price changes in one good can affect demand for related goods.
Vocab: ceretis paribus, normal good, inferior good, demographics, complements, substitutes
Chapter 4 section 3: What factors affect elasticity of demand?
Facts:
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Demand that changes very little in response to a price change is inelastic
Demand that changes a great deal in response to a price change is elastic
A good’s elasticity is affected by the availability of substitutes, the relative importance of a good,
whether the good is a necessity or a luxury, and the amount of time that has passed since the price
change.
Total revenue a firm can make is affected by the elasticity of demand at a given price.
Vocab: elasticity of demand, inelastic, elastic, unitary elastic total revenue
See quick study guide on pg. 105
Also, study PPT lectures & past quizzes/test of Chapter 4
Chapter 5: Supply: EQ: How do suppliers decided what goods and services to offer?
Chapter 5 section 1: How does the law of supply affect the quantity supplied?
Facts:
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Producers offer more of a good as price increases and less as it decreases.
Supply schedules and curves can show individual and market supply
Suppliers find it easier to change quantity supplied the more time passes
Vocab: supply, law of supply, quantity supplied, supply schedule, variable, market supply schedule,
supply curve, market supply curve, elasticity of supply
chapter 5 section 2: How can a producer maximize profits?
Facts:
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Firms look for highest marginal product of labor; they avoid diminishing or negative marginal
returns
Firms set output where marginal revenue equals marginal cost
Firms continue to operate as long as total revenues exceed variable cost
Vocab: marginal product of labor, increasing marginal returns, diminishing marginal returns, fixed
cost, variable cost, total cost, marginal cost, marginal revenue, average cost, operating cost.
Chapter 5 section 3: How does the supply curve shift?
Facts:
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Changes in input costs affect supply
Government affects supply through subsidies, taxes, and regulations
Changes in the global economy, future expectations about prices, the number of suppliers, and
decisions about where to locate facilities all affect supply
Vocab: subsidy, excise tax, regulation
See quick study guide pg. 129
Also, study PPT lecture notes & tests & quizzes
Chapter 6: Prices EQ: What is the right price?
Chapter 6 section 1: What factors affect prices?
Facts:
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Equilibrium is the point of balance at which the quantity demanded equals quantity supplied.
Price is determined by supply and demand
Prices changes when supply and/or demand changes
The government may establish price ceilings or price floors to control prices
Government intervention may cause market disequilibrium
Vocab: equilibrium, disequilibrium, shortage, surplus, price ceiling, rent control, price floor, minimum
wage.
Chapter 6 section 2: How do changes in supply and demand affect equilibrium?
Facts:
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Markets that are in disequilibrium naturally move toward equilibrium
An increase in supply in lower prices; a decrease in supply causes price to rise
Increased demand causes price to rice; a decrease in demand lowers price
Vocab: Inventory, fad, search costs
Chapter 6 section 3: What roles do prices play in a free market ceremony?
Facts:
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Prices act as incentives for buyers and sellers
Prices are signals that tell buyers and sellers what to do or not to do
Prices provided a common language and standard measure of value
Prices allow producers to allocate their resources efficiently
Vocab: supply shock, rationing, black market
See quick study guide pg. 155
Also, study PPT lecture notes & past tests/quizzes
Chapter 7: Monopoly: the exclusive possession or control of the supply or trade in a commodity or
service.