1. Normal Profit vs. Economic Profit In economics, a firm is said to be making a normal profit when total revenues equal total costs. These normal profits then match the rate of return that is the minimum rate required by equity investors to maintain their present level of investment. Economically, the "normal profit" is thus treated as a cost, and recognized as one of the two components of the cost of capital. An economic profit arises when its revenue exceeds the total (opportunity) cost of its inputs, noting that these costs include the cost of equity capital that is met by "normal profits."

2. Invisible Hand The Case for the Market System Competition creates efficiency through incentives and freedoms provided by the market system Allows the market to answer the basic economic questions –What will be produced? –How will the goods / services be produced? –Who will get the goods / services? –How will the system accommodate change?

3. Durable vs. Non-Durable Goods durable goods Definition Products that aren't consumed or quickly disposed of, and can be used for several years. also called hard goods. (from Investorwords.com) Productshard goods non-durable good Definition A good which is immediately used by a consumer or which has an expected lifespan of three years or less. Examples of non-durable goods include food and clothing. opposite of durable goods. also called soft good. good consumergoods food

4. Business Types ProsCons Sole Proprietorship Partnership Corporation

5. Market Types Monopoly Oligopoly Monopolistic Competition Perfect Competition

6. A market structure in which the following five criteria are met: 1. All firms sell an identical product. 2. All firms are price-takers. 3. All firms have a relatively small market share. 4. Buyers know the nature of the product being sold and the prices charged by each firm. 5. The industry is characterized by freedom of entry and exit.

7. Monopolistic Competition A type of competition within an industry where: 1. All firms produce similar yet not perfectly substitutable products. 2. All firms are able to enter the industry if the profits are attractive. 3. All firms are profit maximizers. 4. All firms have some market power, which means none are price takers.

8. Spillover Benefits / Costs

9. Government’s Role