Download Honors Economics Unit 2 Study Guide

Economics Unit 3 Study Guide (Microeconomics)
Complete this study guide on a separate sheet of paper for full credit. Number each answer on your sheet.
1. What is demand? (79)
2. What does the law of demand state? (79)
3. What is the difference between a change in quantity demanded (along the demand curve) and a shift in the demand
curve? (82-83)
4. What economic system is the United States economy based on? (79)
5. How would a growing population affect demand?(87)
7. What does ceteris paribus assume about the demand schedule?(85)
8. What are the determinants of demand?(86-88)
9. How are inferior and normal goods different?(86-87)
10. Study and be able to interpret demand schedules, curves, supply schedules and curves and market equilibrium.
Draw an example of a supply and demand curve and label the following:
Price, Quantity, Equilibrium(125-126), Supply(105), Demand (82-83), Shortage(136), Surplus(134) Price Ceiling(128-130)Price
Floor(130-131)
11. What is supply? (101)
12. What does the law of supply state?(101)
13. What is the difference between a change in quantity supplied and a shift in the supply curve? (117)
14. What is the effect of import restrictions on price?(118)
15. What are fixed costs? Examples?(111)
15. What are variable costs? Examples(111)
16. What are examples of goods with elastic demand? (93)Inelastic demand?(93)
17. How is time related to the elasticity and inelasticity of supply?(104-106)
18. What are two ways that the government can have an influence on supply?(117-118)
19. What are examples of goods with elastic supply? (104-106) Inelastic supply?(104-106)
20. On what type of goods does the government generally place price ceilings?(128-130) Price floors?(130-131)
21. Define rent control. (129)What type of price fixing is this?(129)
22. Define minimum wage. (130)What happens if the government sets wages above the equilibrium level?(130)
23. What happens at market equilibrium?(125)
24. What happens to a market in equilibrium when there is an increase in supply?(126)
25. What is it called when the government uses a tool other than money to allocate goods?(117-118)
26. What will happen to the equilibrium price and quantity if the demand for a product increases?(126-127)
27. What is a shortage? (136) What is a surplus?(134)
28. Why do natural monopolies exist? (158) How do they function? (158) What are examples? (158)
29. What is monopolistic competition?(166) What are examples of goods sold in a monopolistically competitive
market?(167)
30. What are three forms of nonprice competition?(167-168)
31. What will happen if an extremely high price is charged in a monopolistically competitive market?(168-169)
32. What is the effect if the government deregulates a product or service?(172-173) What are some examples of
industries that have recently been deregulated?(175-176)
33. Why does the government issue patents?(159)
34. What are the conditions of perfect competition?(151)
35. Define and describe oligopoly.(169-171)
38. What is a barrier to entry? (153)What is an example of this situation?(153-154)
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39. Why do companies practice price discrimination?(163)
40. What are marginal costs?(111)
41. Define and describe characteristics and list the advantages and disadvantages of each:
A. Sole Proprietorship(185-188)
B. Partnership(191-193)
C. Corporation(195-198)
42. Which type of business organization has the greatest number of firms? (185)
43. Which type of business organization has the greatest sales revenue? (195)
44. What are the other forms of organizations?(201-204)
45. What is the difference between a vertical and horizontal merger?(199) What are examples?(199)
46. What is the Circular Flow Model and what is the difference between the Product and Factor Markets?
Fill in the chart below.(151-171)
Most
competitive
Type of Market
A
Structure
Least Competitive
B
C
D
Unit 2 Review Questions
47. What are trade-offs (8) and opportunity costs?(9)
48. What are the four factors of production? (4-6)What are examples of each?
49. What does laissez faire mean?(41)
50. What is the difference between public and private property?(41, 62)
51. What are the two markets in the circular flow model?(30) What does the circular flow model show?(30)
52. What are the three types of mixed economic systems?(26-27)
53. What does it mean to make a decision at the margin?(10)
54. What economic goals are emphasized in a market economy?(27) A command economy?(27(
55. What is scarcity?(4)
56. What does a production possibilities curve show?(13)
58. What does the “invisible hand” describe?(32)
Unit 1 Review Questions
59. What is the relationship between risk and reward in regards to investments?
60. What is the relationship between the amount of formal education a person in the U.S. obtains and the amount of
income they can expect? Why?
61. What is the difference between simple and compound interest?
62. What is insurance? What are some common types of insurance? What is the purpose of purchasing insurance?
63. What is a premium? What is a deductable? What is the relationship between the two?
64. What is diversification and what is the benefit of it when investing?
Essay Questions: Choose one of the following to answer on the unit test.
Describe the role of buyers and sellers in determining market clearing price.
Explain how price floors create surpluses and price ceilings create shortages.
Compare and contrast three forms of business organization—sole proprietorship, partnership, and corporation.
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