1. Demand and Supply

2. Main idea: Demand includes only those people who are willing and able to buy.

3.   Demand  Supply  Market  Voluntary exchange  Law of demand  Quantity demanded  Real income effect  Substitution effect  Utility  Marginal utility  Law of diminishing marginal utility Vocabulary

4.   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

5. Main Idea: Prices go up and down depending on demand.

6.   Demand schedule  Demand curve  Complementary good  Elasticity  Price elasticity of demand  Elastic demand  Inelastic demand vocabulary

7.   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

8. Main idea: The law of supply is geared towards making profits

9.   Law of supply  Quantity supplied  Supply schedule  Supply curve  Technology  Law of diminishing returns vocabulary

10.   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

11. Main Idea: Shortages occur when the quantity demanded is larger than the quantity supplied at the current price.

12.   Equilibrium price  Shortage  Surplus  Price ceiling  Rationing  Black market  Price floor Vocabulary

13.   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

14. Business Organizations

15. Main Idea: You can take your ideas and start your own business.

16.   Entrepreneur  Startup  Small business incubator  Inventory  receipts Vocabulary

17.   Why do people start their own businesses?  How can those people get help?  What basic elements must every business consider? Notes

18. Main Idea: The two most common ways to organize business is sole proprietorships and partnerships.

19.   Sole proprietorship  Proprietor  Unlimited liability  Assets  Partnership  Limited partnership  Joint venture Vocabulary

20.   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

21. Main idea: Corporations disperse profit to shareholders

22.   Corporation  Stock  Limited liability  Articles of incorporation  Corporate charter  Common stock  Dividend  Preferred stock  franchise vocabulary

23.   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

24. Main Idea: Suppliers want as little competition as possible.

25.   Market Structure  Perfect competition Vocabulary

26.   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

27. Main Idea: Advertising plays a major role in two types of market structures.

28.   Monopoly  Barriers to entry  Economies of scale  Patent  Copyright  Oligopoly  Product differentiation  Cartel  Monopolistic competition Vocabulary

29.   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

30. Main Idea: The US supports competition in the economy.

31.   Interlocking directorate  Antitrust legislation  Merger  Conglomerate  deregulation vocabulary

32.   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