Economics Periods 1 & 2

Review for Chapters 5, 6 (Section 1), & 7
Please continue to check this website for more study material!
1) According to what law do producers offer more of a good as its' price increases, and less as the price falls? law of supply
2) Supply is the amount of goods available. 
3) A market suplpy schedule shows the relationship between prices and the total quantity supplied by all firms in a particular market.
4) What are variable costs?
5)What is an example of a fixed cost? Rent, full-time salary workers, etc
6) The point at which the demand for a product/ service is equal to the supply of that product/ service? equilibrium (shown in the picture above #3)
7) What occurs when the quantity supplied exceeds quantity demanded and the actual price of a good is higher than the equilibrium price? Surplus
8) Anti-trust laws are used to break up what? monopolies
9) 70%-80% of output is produced by up to 4 firms in this type of market structure. oligopoly
10) In what market structure do companie compete to sell products that are similar? (There are many firms, few barriers, and similar products)
11) Market structure dominated by a single seller? Monopoly
12) What is a standard measure of value, and is considered common language for buyers and sellers? Price
13) Government intervention in a market that affects the price, quantity, or quality of that product/service? regulation
14) Elasticity of supply measures how firms will respond to changes in the price of a good.
15) How do changes in supply and demand affect equilibrium?
An increase in supply will cause the price to fall; A decrease in supply will cause the price to rise; An increase in demand will cause prices to rise; A decrease in demand will cause prices to fall.
16) A product that enjoys enormous popularity for a fairly short time is known as a fad.
17) What are some characteristics of perfect competition? many buyers and sellers, identical products, no control over prices, free market entry and exit, informed buyers and sellers (This was on the concept web worksheet)

Chapter 2: Sections 1 & 2 PowerPoint Presentation Notes:
3 Economic Questions: 
       What goods and services should be produced?       How should these goods and services be produced?       Who consumes these goods and services? 
Economic Goals and Societal Values: 
1) Economic Efficiency: Resources are scarceà societies use them to their max.

To increase efficiency= society accurately determines what to make.

 2) Economic Freedom:Limitations on economic freedoms

Patriotism: Love of one’s . Passion that inspires a person to serve his/ her country.

 3) Economic Scarcity and Predictability:People feel the government should provide a safety net – a set of government programs that protect people experiencing unfavorable economic conditions.

Example: social security

 4) Economic Equity: Equal pay= equal work

Society does not value all jobs equally

 5) Economic Growth:Standard of Living: Level of economic prosperity

Growing population= economy provides new jobs/ income

 6) Additional Goals: Full employment, universal medical care, etc.

*When an economy prioritizes, there must be trade-offs.

 4 Economic Systems:1)    Traditional Economy: Habit, custom, ritual to decide what and how to produce things.       Not much innovation/ change       Revolves around family       Work divided along gender lines       Work to support entire group, not just themselves       No modern conveniences       2) Market economy: Economic system based on trade       Capitalism       3) Command Economy:        Centrally planned economy- only the government decides how the 3 questions will be answered4) Mixed Economy:Market-based economy in which the government plays a small role
Market:  Buyers & sellers exchange things.1)    Provide incentives to producers/consumers2)    Transmit information 3)    Distribute income among resource ownersExample: store
Specialization: Individual produces one or few goods/ services.Concentration of production efforts of individuals and firms on a limited number of activities
Market Participants: 1)    Households (leading roleà consumers)2)    Firms3)    Government4)    Rest of the world
Market Economies: Microeconomics
National Economics: Macroeconomics
 Pure Market EconomyNo government. Private firms account for all production.Resources ownersà incomeInvisible Hand 
Problems with a Pure Market Economy1)    Difficulty enforcing Property Rights2)    Some People Have Few Resources to Sell3)    Some Firms Try to Monopolize Markets4)    No Public Goods5)    Externalities
Pure Centrally Planned Economy       All resources are government-owned       Public, or command, economy       Communism-Visible Hand 

Problems with a Centrally Planned Economy

1)      Consumers Get Low Priority

2)      Little Freedom of Choice

3)      Central Planning can be Inefficient

4)      Resources Owned by the State are Sometimes Wasted

5)      Environmental Damage


September 27, 2010 

Article 1:

1) Who has received the benefits of economic growth during the past quarter century (pg 1)?

2) Why should we be concerned by a more unequal distribution of income?

Article 2:

1) What has happened to the number of minutes worked to buy food between 1919-1997? (pg 7)

2) What has happened to the amount of hours worked per square foot of housing between 1956-1996? (pg 6)


October 13, 2010

Elasticity of Demand: Focuses on how much the quantity will change in response to a price change.

Elastic = Responsive (Gum, Pizza, Cookies, etc)

Example Scenario: "A patient is given a presciption for a drug to control high blood pressure. The patient's insurance doesn't cover drugs, so the patient must pay out of pocket."

Why?????ELASTIC! Some people are not willing to pay a higher price for medicine. They are "non-compliant."

Inelastic = Unresponsive (Examples: Gasoline, Insulin, etc)