Three Level Study Guide
Chapter 6 – Economics
DIRECTIONS: Read the following information. Check ( ü ) each correct statement and be prepared to support your choices.
Level I --- Literal Level: What does this reading say about …?
_________ 1. All societies make decisions about how to allocate their resources.
_________ 2. In a market economy, supply and demand determine only the price of the goods and services that are produced.
_________ 3. Understanding supply and demand is important because it helps managers determine the prices they should charge.
Level II --- Interpretive Level: What does this reading mean?
________ 1. Understanding economics is fundamental to the success of a business.
________ 2. Companies may only sell products that they are told to.
________ 3. The breakeven point indicates how many units a company needs to sell before they earn a profit.
Level III --- Applied Level - How does this information apply in the real world …?
________ 1. Economic decisions would be necessary even if scarcity did not exist.
________ 2. When deciding which restaurant to eat at, you will inquire an opportunity cost.
________ 3. A public company’s profit is directly related to their share price.