Chapter 7

Demand and Supply

Chapter 7 Section 1: Demand

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

Demand Supply Market Voluntary exchange Law of demand Quantity demanded Real income effect Substitution effect Utility Marginal utility Law of diminishing marginal utility

Vocabulary

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

Chapter 7 section 2: The Demand

Curve and Elasticity of

Demand

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

Demand schedule Demand curve Complementary good Elasticity Price elasticity of demand Elastic demand Inelastic demand

vocabulary

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

Chapter 7 Section 3: Law of Supply and Supply Curve

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

Law of supply Quantity supplied Supply schedule Supply curve Technology Law of diminishing returns

vocabulary

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

Chapter 7 Section 4: Putting Supply

and Demand Together

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

Equilibrium price Shortage Surplus Price ceiling Rationing Black market Price floor

Vocabulary

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

Chapter 8

Business Organizations

Chapter 8 Section 1: Starting a

Business

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

Entrepreneur Startup Small business incubator Inventory receipts

Vocabulary

Why do people start their own businesses? How can those people get help? What basic elements must every business

consider?

Notes

Chapter 8 Section 2: Sole

Proprietorships and Partnerships

Main Idea: The two most common ways to organize business is sole

proprietorships and partnerships.

Sole proprietorship Proprietor Unlimited liability Assets Partnership Limited partnership Joint venture

Vocabulary

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

Chapter 8 section 3: The Corporate

World and Franchises

Main idea: Corporations disperse profit to shareholders

Corporation Stock Limited liability Articles of incorporation Corporate charter Common stock Dividend Preferred stock franchise

vocabulary

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

Chapter 9 Section 1: Perfect

Competition

Main Idea: Suppliers want as little competition as possible.

Market Structure Perfect competition

Vocabulary

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

Chapter 9 Section 2: Monopoly, Oligopoly,

Monopolistic Competition

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

Monopoly Barriers to entry Economies of scale Patent Copyright Oligopoly Product differentiation Cartel Monopolistic competition

Vocabulary

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

Chapter 9 Section 3: Government Policies Toward

Competition

Main Idea: The US supports competition in the economy.

Interlocking directorate Antitrust legislation Merger Conglomerate deregulation

vocabulary

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