Demand and Supply
Main idea: Demand includes only those people who are willing and able to buy.
Demand Supply Market Voluntary exchange Law of demand Quantity demanded Real income effect Substitution effect Utility Marginal utility Law of diminishing marginal utility Vocabulary
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. Notes
Main Idea: Prices go up and down depending on demand.
Demand schedule Demand curve Complementary good Elasticity Price elasticity of demand Elastic demand Inelastic demand vocabulary
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”? Notes
Main idea: The law of supply is geared towards making profits
Law of supply Quantity supplied Supply schedule Supply curve Technology Law of diminishing returns vocabulary
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? Notes
Main Idea: Shortages occur when the quantity demanded is larger than the quantity supplied at the current price.
Equilibrium price Shortage Surplus Price ceiling Rationing Black market Price floor Vocabulary
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? Notes
Business Organizations
Main Idea: You can take your ideas and start your own business.
Entrepreneur Startup Small business incubator Inventory receipts Vocabulary
Why do people start their own businesses? How can those people get help? What basic elements must every business consider? Notes
Main Idea: The two most common ways to organize business is sole proprietorships and partnerships.
Sole proprietorship Proprietor Unlimited liability Assets Partnership Limited partnership Joint venture Vocabulary
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? Notes
Main idea: Corporations disperse profit to shareholders
Corporation Stock Limited liability Articles of incorporation Corporate charter Common stock Dividend Preferred stock franchise vocabulary
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? Notes
Main Idea: Suppliers want as little competition as possible.
Market Structure Perfect competition Vocabulary
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? Notes
Main Idea: Advertising plays a major role in two types of market structures.
Monopoly Barriers to entry Economies of scale Patent Copyright Oligopoly Product differentiation Cartel Monopolistic competition Vocabulary
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? Notes
Main Idea: The US supports competition in the economy.
Interlocking directorate Antitrust legislation Merger Conglomerate deregulation vocabulary
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? Notes