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1. Write down the key terms that match the following definitions.

a. relative : Compared to something else.

b. supply : The quantity of a good or service that producers are willing and able to sell at
various prices during a specific time period.
c. demand : The different quantities of a good or service that buyers are willing and able
to purchase at various prices during a specific time period.
d. quantity supply : The amount of something that sellers are willing and able to sell at a
certain price.
e. supply schedule : A table showing the relationship between prices and quantities supplied.
f. supply curve : The graph of a supply schedule.
g. demand schedule : A table showing the relationship between prices and quantities
h. demand curve : The graph of a demand schedule.
i. supply & demand curve : A graph showing the intersection of the supply curve and the
demand curve.
j. equilibrium price : The price at which quantity supplied equals quantity demanded.
k. scarcity : When demand is greater than supply.
l. surplus : When supply is higher than demand.
m. shortage : When demand is higher than supply.
2. Summarize the law of supply and demand.
A price is determined based on how much of a good is produced compared to how badly the
consumers want it.

When supply increases, demand decreases (this is because producers want to supply more of
things of a high price and consumers don’t want things that are high prices)
4. Describe how prices are set in terms of scarcity.

Things that are scarcer are more expensive.

5. Describe what happens when there is a shortage.

Price increases, demand is increases

6. Describe what happens when there is a surplus.

Price decreases, demand decreases

7. Describe what happens when demand for something suddenly increases because of a trend.

The price goes up and demand increases which decreases supply. To sell more things of the
higher price, the producers will supply more which equalizes the price. Then when the demand
decreases the price will go down and the supply with stay the same. Soon enough the supply will
go back down and equalize price.
1. Write down the key terms that match the following definitions.
a. production : The creation of goods and services to satisfy wants and needs.
b. allocation : Setting aside resources for a specific purpose.
c. opportunity cost : The benefits of the best alternative option that are given up by a
particular decision.
d. efficiency : Producing something with as little waste as possible.
e. optimal : Most favorable or desirable.
2. List the three factors of production that are used as inputs for making goods and services.

land, labor, capital

3. Describe how producers determine opportunity cost.

Value of all the consequences of a choice

4. Describe an efficient and an inefficient production situation.

efficient- optimal ratio between benefit and cost of resources

inefficient- resources could be better used


5. Explain how government interference in a market can lead to inefficiency.

The government can make a choice that is satisfying to them but not to everyone else which
makes them mad. Everyone’s needs need to be equal. It also risks being unproductive.

6. Explain how efficiency can be improved.

Increasing resources (using land wisely, increase labor, improved capital)
1. Write down the key terms that match the following definitions.
a. utility : The amount of personal satisfaction gained from the use or consumption of goods
and services.
b. wealth effect : The tendency for consumers to buy more goods as their income rises.
c. decreasing marginal utility : The decrease in the amount of satisfaction added as each new
unit is consumed.
d. budget constraints : Limitations on a person's ability to spend money.
e. normal goods : Goods that people buy more of as their wealth increases.
f. inferior goods : Goods that people buy less of as their wealth increases.
g. substitute : Switching from one good to a similar good, usually one that is less expensive.
h. fungibility : When all units of a good are the same as each other.
i. elasticity : The flexibility of a consumer's demand for a good or service.
j. elastic demand : When consumer demand rises and falls with price.
l. individual good : Something that an individual can enjoy to the exclusion of everyone
m. public good : A nonexcludable, nonrival good.
n. non-excludable : Something people can't be kept from using.
o. non-rival : When someone else's use doesn't diminish the usability of a good.
p. free rider : A nonpaying user of a good.
q. market failure : The inability of a free market to provide a good that's demanded by
r. consumer sovereignty : The idea that consumer demand determines what gets supplied.
2. Describe the law of decreasing marginal utility. In addition, how does it work against the
wealth effect?
Buying more when you have the money isn’t as satisfying. People who are wealthy tend to not
be as satisfied as those who aren’t because having a lot won’t change how they feel as much.
3. Give an example of each type of good in the table below.

Type of Good Example

Normal Cars, air travel

Inferior Ramen, bus

Fungible gas

Individual EXCLUDABILITY Potato (you split it)

Public parade

4. Describe how substitution works and give an example.

If something is more expensive, they’ll typically go to their cheaper substitution. Butter &

5. Explain why there's a market failure for public goods.

Since it’s free, producers don’t want to produce it but people still demand it & they can’t
efficiently handle it

1. Write down the key terms that match the following definitions.
a. commodity : Something useful that can be bought and sold. Has a supply and demand that
affects its price
b. wage : Amount received by workers for their labor.
c. labor market : Area of the economy in which jobs are offered and accepted.
d. reserve wage : The lowest amount a worker will accept for a job.
e. workforce : Collective term for the people who work at jobs.
f. labor pool : Workers available for jobs.
g. immigration : The movement of people from one country to another.
2. List the factors that influence the price of labor.
a. culture
b. education levels
c. international competition
d. historical changes
e. technological changes
f. supply and demand

3. Describe how productivity affects wages.

If someone is going to contribute a lot, they’ll be paid more.

4. Explain why there are limitations on the flexibility of the workforce.

Most jobs require some sort of training

5. Describe the arguments for and against immigration.

Against: takes away jobs

For: take jobs others don’t want

6. Describe how culture can affect the labor market.

Jobs restricted to certain people, female typical jobs, kids working

1. Write down the key terms that match the following definitions.
a. globalization : Increasing interconnectedness of people and nations through
communication, trade, and the exchange of ideas.
b. domestic : Related to or located in one's home country.
c. trade barriers : Policies that reduce or eliminate international trade.
d. protectionist : Policies designed to keep a country's economy, businesses, and workers
safe from competition.
e. tariff : A tax on international trade.
f. quota system : A system that limits the import or export of certain goods.
g. subsidy : A government payment to someone.
h. outsource : To send a job from one place to another, usually another country.
2. Describe how globalization affects the labor market.
Some jobs don’t exist in certain countries anymore. Competition with whole world. New jobs

3. Describe how free trade goes along with globalization.

Free trade is between other countries and doesn’t restrict international trade

4. Describe the arguments for and against free trade.

For- efficient allocation of resources

Against- exploits less powerful nations

5. Describe the effects of outsourcing.

Sending jobs to places where people are willing to work for less, people lose their jobs
(unemployment increase)

Puts downward pressure on wages for those with jobs

Influence for higher education

1. Write down the key terms that match the following definitions.
a. labor union : Workers in a particular job or workplace organized into a group that pushes
for higher wages and better working conditions. (increase power in labor market)
b. union dues : Money paid by workers to support the operation of a union.
c. collective bargaining : Process in which a group of employees negotiates a contract with an
d. individual bargaining : A process where individual workers negotiate with their employer
e. bargaining power : The level of strength enjoyed by one side in a negotiation.
f. industrial action : Steps taken by workers to affect production in order to influence
g. strike : When workers stop working.
h. slowdown : An intentional reduction in productivity by workers.
i. strikebreakers : Replacement workers intended to end a strike.
j. lockout : When an employer prevents workers from entering the workplace.
k. lobbying : Trying to persuade the government to pass favorable laws.
l. unemployment insurance : A system of insurance that pays unemployed workers for a
period of time as they look for another job.
2. Explain why workers are willing to pay union dues.
They expect benefits to be worth their money with higher wages and better working conditions

3. Explain why collective bargaining gives workers more bargaining power.

Makes them equal to the employer since the employer can’t afford to lose everybody
4. Describe how industrial actions influence employers and what employers can do in response.

Strike: No one is working so no revenue because nothing is being made, they can hire

Slowdown: Decreases productivity and revenue, could do a lockout

5. Describe the effects of the National Labor Relations Act (NLRA) and the Taft-Hartley Act on
employers and employees.

NLRA- legalized striking, prevented employers from firing employees in unions, investigated
abuses by employers

Taft- unions must give 60 days notice of strike, outlawed some industrial action

6. Give two examples of laws passed as a result of union lobbying.

Minimum wage, unemployment insurance,

7. Explain why union membership is declining in the United States.

Union jobs are outsourced



1. Write down the key terms that match the following definitions.
a. house market : Where houses and apartments are offered and purchased or rented.
b. owner-occupied : When the person who lives in the housing unit also owns it.
c. renter-occupied : When the person who lives in the housing unit pays the owner rent to
live there.
d. landlord : Owner of a property who rents it to those who live there.
e. cooperative : A housing type where the owners are the shareholders in a corporation that
owns the building.
f. single-family home : A house not attached to any other houses, intended to shelter one
g. apartment building : Renter-occupied units in a building owned by a landlord.
h. town house : A house attached to other houses, generally in a long row.
i. condominium : A structure of two or more units that are individually owned, and
common parts of the property are owned jointly by the unit owners.
j. rent : To pay money for the right to live somewhere.
k. investment : Purchase of an asset with the intention of making a profit.
l. demographic : The distribution of different groups in a population based on such factors as
age, income, profession, etc.
m. mortgage : A loan given to pay for a house or other type of real estate.
n. mortgage interest rate : The amount of interest charged on a loan used to buy a house.
o. priced out : When a price becomes too high to be affordable.
2. List the advantages and disadvantages of renting a place to live.



don’t own it, can’t get money back because you never owned it, reduced freedom

3. List the advantages and disadvantages of buying a house.


own house, can sell it for more, can decorate or remodel


expensive, paying back loans, taxes, buy insurance

4. Explain why the housing market is a unique market.

Housing is inelastic because it is expensive and takes a while to make. Takes a long time for the
supply of housing to increase when demand increases. Prices change a lot.

5. Describe how mortgage interest rates affect the housing market.

They’re repaid over a long time so different interests have big impact because it changes how
much someone pays each month.

6. Describe the difference between a buyer's market and a seller's market.

Sellers- when buyers compete with each other, sellers can afford to wait for best offer

Buyers- sellers compete for a limited number of buyers, buyers wait for best price

7. Describe the cycle of the housing market.

Demand increase – prices goes up – encourages people to build more – price too high and rent –
demand decrease – price goes down
1. Write down the key terms that match the following definitions.
a. population density : Average number of people living in a particular space.
b. urban : Located in a city; a densely populated area.
c. rural : Located in the country; a sparsely populated area.
d. median home price : Midpoint price level; half the homes cost more, half the homes cost
e. Suburbs : Primarily residential areas outside of but near a major city.
f. Exurbs : Primarily residential areas far from major cities.
g. zoning laws : Regulations defining how land in certain areas may be utilized.
h. urban renewal : The revitalization of an old and undesirable area of a city.
2. Describe how population density influences the law of supply and demand in the housing
Lots of people, less space & higher demand. Less people, more space & lower demand.

3. Describe the advantages and disadvantages of living in an urban area.

More jobs, higher paying jobs, culture, places to go, larger social group


Crime, pollution, no privacy

4. Describe the advantages and disadvantages of living in a rural area.

Less crime and pollution, privacy, close to outdoor activities

Less jobs, not near anything

5. If you had the choice, would you prefer to live in an urban or a rural area?

6. Explain why urbanization occurs.

Increased cultural activities and money

7. Explain how the suburbs developed in the United States.

Automobiles made it possible to live farther from city but get the benefits
8. Describe the causes and effects of urban renewal.

When people leave cities, demand decreases and prices decline

City becomes desirable, demand increases, price increases

1. Write down the key terms that match the following definitions.
a. standard of living : The amount of goods and services available to the average person.
b. market share : The percentage of overall sales in a particular area that is made by a single
c. specialization : Focus on a specific, narrowly defined task.
d. trade : The exchange of goods and services for other commodities such as money.
e. diversity : Create differences.
f. protectionist : Policies designed to keep a country's economy, businesses, and workers safe
from competition.
g. tariff : A tax on international trade.
h. subsidy : A government payment to someone.
2. Describe how the standard of living can be raised.
avg prices can fall or avg income raises, increase productivity
3. List the four ways that competition increases productivity and explain why this happens.

1. drives people to work harder and faster

2. pushes people to improve their skills and knowledge

3. encourages finding new and better ways of doing things

4. eliminates unproductive or inefficient competitors

4. Explain why specialization increases productivity.

Easier to do one thing well than many things. Eliminates wasted energy to get good at all things.

5. Explain how trade ( AIDS COMEPITION AND SPECIALIZATION) increases productivity.

Enhances efficiency bc it allows resources and factors of production to go from one place to
another where they’re most needed

6. Describe how trade benefits consumers.

It can get them to diversify goods bc they can get things they didn’t have originally

7. List the drawbacks to trade.

Less jobs,

8. Explain how protectionist policies affect trade.

Tariffs make imports expensive so they don’t want to trade, subsidies make local things cheaper
1. Write down the key terms that match the following definitions.
a. business cycle : Regular changes in economic activity.
b. inflation : Rising prices for goods and services.
c. demand-pull inflation : A rise in prices driven by rising consumer demand.
d. cost-push inflation : A rise in prices driven by rising production costs.
e. boom : A period of high employment and rising demand.
f. recession : A general slowdown in economic activity.
g. depression : A period of decreasing economic activity, falling prices, and high
h. exogenous : Something external to a system.
i. monetary policy : The regulation of the money supply through various tools of government
j. fiscal policy : The taxation and spending practices of the government.
k. budget deficit : When income is less than expenditures. DEMAND INCREASE
l. budget surplus : When expenditures are less than income. DEMAND DECREASE
2. Describe how inflation takes place.
As time passes, things get more expensive at different rates

3. Explain how inflation can be healthy for an economy.

If prices rise with wages rising

4. Describe hyperinflation, stagnation, and stagflation.

Hyperinflation: prices rise quickly and wages cant keep up

Stagnation: lack of growth in economy, lost jobs and wage cuts

Stagflation: wages fall, prices fall

5. List the phases of the business cycle and describe how the cycle moves forward.

Boom (demand, inflation, GDP increase, unemployment decrease) – recession (GDP, demand
decrease, unemployment & inflation high) – possible depression – recovery

6. Describe how monetary policy can be used to control the business cycle.

By increasing or decreasing interest rates or restricting/expanding loans of money

7. Describe how fiscal policy can be used to control the business cycle.

Cutting/raising taxes or increasing/reducing spending.

Cutting and increasing increases demand and speeds growth

1. Write down the key terms that match the following definitions.:
a. wholesale : Sales to other companies rather than to consumers.
b. economies of scale : Increased efficiency and often reduced costs resulting from an
increase in the size of operations or amount of production.
c. overhead : Costs of the physical aspects of doing business.
2. Describe how economies of scale reduces prices and increases profits.

They buy a lot of a product from a company for cheap and then resell it cheaply too so everyone
will want it

3. Describe the costs associated with doing business online and compare those costs to traditional
retail outlets.

Online has to pay for software developers, shipping costs and bandwith while traditional needs
land and money for employees

4. List the advantages to consumers of shopping online.

Lots of choices, don’t have to go out

5. Describe how Amazon eliminates the problem of shipping costs.

6. List the reasons why big Internet companies can undersell their competitors.