Unit II Map

Microeconomic Concepts

SSEMI1 The student will describe how households, businesses, and governments are interdependent and interact through flows of goods, services, and money.

a. Illustrate by means of a circular flow diagram, the Product market; the Resource (factor) market; the real flow of goods and services between and among businesses, households, and government; and the flow of money.

b. Explain the role of money as a medium of exchange and how it facilitates exchange.

SSEMI2 The student will explain how the Law of Demand, the Law of Supply, prices, and profits work to determine production and distribution in a market economy.

a. Define the Law of Supply and the Law of Demand.

b. Describe the role of buyers and sellers in determining market clearing price.

c. Illustrate on a graph how supply and demand determine equilibrium price and quantity.

d. Explain how prices serve as incentives in a market economy.

SSEMI3 The student will explain how markets, prices, and competition influence economic behavior.

a. Identify and illustrate on a graph factors that cause changes in market supply and demand.

b. Explain and illustrate on a graph how price floors create surpluses and price ceilings create shortages.

c. Define price elasticity of demand and supply.

SSEMI4 The student will explain the organization and role of business and analyze the four types of market structures in the U.S. economy.

a. Compare and contrast three forms of business organization—sole proprietorship, partnership, and corporation.

b. Explain the role of profit as an incentive for entrepreneurs.

c. Identify the basic characteristics of monopoly, oligopoly, monopolistic competition, and pure competition.

Vocab for Unit II: Vocab must be turned in the day of the test on separate paper, hand written. Please number each vocab word.

1.Quantity demanded12. Determinants of Supply

2. Demand13. Elasticity

3. Substitution effect14. Revenue

4. Income effect15. Equilibrium

5. Normal good16. Price ceiling

6. Inferior good 17. Price floor

7. Complements18. Minimum wage

8. Substitutes19. Surplus

9. Determinants of demand20. Shortage

10. Supply21. Diminishing marginal returns

11. Quantity supplied22. Diminishing marginal utility

23. Market clearing point

Unit II Microeconomics Study Guide

SSEMI 1

  1. Illustrate the circular flow diagram and all its parts. Know how the real flow and the money flow move through the economy.
  2. What is the role of money and how does it facilitate exchange?

SSEMI 2

  1. What is the Law of Demand?
  2. What is the Law of Supply?
  3. What are the things that influence prices?
  4. What are the determinants of demand?
  5. What are the determinants of Supply?
  6. What is the difference between a change in demand and a change in Quantity demanded? Common mistake
  7. What is the difference between a change in Supply and a change in quantity supplied? Common mistake
  8. Draw Supply and Demand Curves and label equilibrium price and quantity.
  9. Be able it identify what happens to price and quantity when curves shift.
  10. What is the role of consumers or sellers in determining market clearing price?
  11. How are prices incentives to consumers and producers?

SSEMI 3

  1. What are price floors and ceilings?
  2. Be able to identify price floors and ceilings on graphs.
  3. What are the reasons for implementing price floors and ceiling?
  4. What are the potential effects on the market of price floors and ceilings?
  5. What are surpluses and shortages? What are some causes?
  6. What is price elasticity of demand? Supply?
  7. What types of items are considered elastic? Inelastic?

SSEMI4

  1. What are the four types of market structures and their characteristics?
  2. Compare the following types of business structures: sole proprietorship, partnership, corporation and the advantages and disadvantages of each.
  3. How does profit serve as an incentive for the entrepreneur?