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Competency: Capital and Natural Resource Markets

Tasks

1. Describe how firms determine the quantity of resources to use and what determines resource supply in competitive markets and imperfectly competitive markets.

2. Define the types of capital.

3. Discuss the limitations of substitutability with respect to natural capital.

4. Describe why social capital is important for economic activities.

5. Discuss how the value of capital stock is determined.

6. Describe the concept of discounting.

7. Explain the difference between the economistic and ecological view of natural capital.

8. Discuss the role of financial capital markets in business decisions.

Competency: Distribution of Income and Wealth

Tasks

1. Define the difference between wealth and income.

2. Define how the distribution of personal income in an economy is measured and discuss issues related to income distribution.

3. Define and explain the functional and personal distribution of income.

4. Explain the determinants of income distributions.

5. Discuss how trade can expand a society’s consumption opportunities.

6. Describe the distribution of income and wealth in the United States.

7. Describe how inequality is measured.

8. Present different definitions of equity.

9. Explain how government’s redistribution of income through taxation, spending, and assistance/entitlement programs affects the well-being of people and businesses in an economy.

10. Explain how subsidies effect income distribution and economic growth.

Competency: Economic Uncertainties

Tasks

1. Describe what is meant by economic uncertainty.

2. Discuss three standard ways of modeling choices made under conditions of uncertainty.

3. Describe the difference between risk and uncertainty.

4. Explain consumer behavior under uncertainty.

5. Differentiate between intermediate and final goals.

6. Discuss the relationship between economics and well-being.

7. Summarize the differences between the three spheres of economic activity.

8. Understand what is meant by “economics in context.”

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Competency: Elasticity

Tasks

1. Use concepts of elasticity of demand and supply to evaluate quantitatively economic situations.

2. Describe how elasticity is calculated and its relevance to understanding markets.

3. Identify and interpret the relationship between price elasticity of demand and the effect of a price change on total revenue.

4. Define, calculate, and interpret cross elasticities and income elasticities of demand.

5. List and explain the determinants of elasticity.

6. Define and differentiate between substitutes and complements.

7. Calculate and explain the determinants of price elasticity of supply.

8. Explain long elasticity and tax incidence.

9. Understand the income and substitution effects of a price change.

10. Define and illustrate equilibrium.

11. Discuss the differences between short-run and long-run elasticities.

C o mpe t e n c y: L a b or M a r kets an d W ages

Tasks

1. Explain how the marginal productivity theory of resource demand applies to wage rate determination.

2. Explain how the wage rate is determined.

3. Calculate and determine wage rates in a competitive labor market and in a monopolistic labor markets.

4. Explain the effects of unions and specific union tactics on wages and employment in both competitive and monopolistic markets.

5. Evaluate the efficiency of specific legislation aimed at increasing wage rates and employment.

6. List and describe the factors that affect worker productivity.

7. Discuss how individuals make decisions about entering the market for paid labor.

8. Describe the interaction of supply and demand in the aggregate labor market.

9. Explain variations in wages among workers, including wage discrimination based on race and gender.

10. Explain how wages are affected by the market value and productivity of the individual working.

11. Discuss wage differences among jobs and professions, using the laws of demand and supply and the concept of productivity.

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Competency: Market Failure

Tasks

1. Discuss how to use the concepts of equity, efficiency, and market failure to analyze and evaluate government policies such as price floors and ceilings, tax policy, and environmental policy.

2. Define and explain the effects of price ceilings and price floors.

3. Identify areas of actual/potential market failure.

4. Discuss causes of market failure and possible means of correction.

5. Describe types of government policy interventions used to overcome or prevent market failure.

6. Explain the effect of market failure on the economy.

7. Define four essential economic activities

8. Describe what is necessary for markets to function effectively.

Competency: Monopolies

Tasks

1. Define monopoly and explain the conditions under which it functions.

2. Analyze the behavior of firms in a monopoly and calculate the resulting changes in producer or consumer surplus.

3. Identify and graphically construct the demand, average revenue, and marginal revenue curves for a pure monopolist.

4. Compare and contrast operations of a monopoly with that of a perfect competitor.

5. Illustrate and explain market inefficiencies related to monopolies.

6. Define and explain different types of pricing in order to regulate monopolies.

7. Define and explain the nature of anti-trust laws.

8. Explain the concept of a bilateral monopoly and its effects on employment and wages.

9. Describe how a monopolist maximizes profits.

10. Discuss the historical development of public purpose organizations regarding the regulation of monopolies and trade practices.

11. Determine the role of government in preventing private monopolies and regulating public monopolies.Competency: Oligopolies and Duopolies

Tasks

1. Define oligopoly and discuss firm behavior under conditions of oligopoly.

2. List characteristics of an oligopoly firm.

3. List the major barriers that keep companies from joining oligopolies.

4. Discuss the pros and cons of oligopolies.

5. Define duopolies.

6. Discuss the Cournot Duopoly, Bertrand Duopoly, and Stackelberg Duopoly.

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Competency: Opport u nity C ost

Tasks

1. Define and compute opportunity cost.

2. Explain the concept of opportunity costs.

3. Differentiate between explicit costs and implicit costs.

4. Relate the marginal theory of value and the theory of time and money in production.

5. Provide an example of the application of opportunity costs.

6. Analyze the concepts of trade-offs and opportunity cost.

7. Ascertain why scarcity faces people at all times and interprets the relationship between trade-offs and opportunity costs.

8. Compare opportunity cost, marginal benefit, and marginal cost.

9. Demonstrate how opportunity costs affect economic decisions.

Competency: Pe r fect C o mp e t i t ion

Tasks

1. Define perfect competition and explain the conditions under which it functions.

2. Learn characteristics of the categories of competition in markets.

3. Identify and determine the short-run supply curve for a perfect competitor.

4. Construct and describe the long-run market supply curve in the case of a perfectly competitive market for a constant cost and an increasing cost market.

5. Compare perfect competition with imperfect competition.

6. List the assumptions behind the traditional model of perfectly competitive markets.

7. Describe how the situation facing the individual firm relates to the overall market situation, in perfect competition.

8. Indicate how firms maximize profits under perfect competition.

9. Explain how, under certain conditions, a perfectly competitive market is economically efficient.

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Competency: Production Factors

Tasks

1. Define factors of production (e.g., labor, capital, entrepreneurship, and natural resources.)

2. Explain and show graphically how production and pricing decisions are made for firms in each of these market structures.

3. Define, explain, and calculate total product, marginal product, average product, total costs, total fixed costs, total variable costs, average costs, average variable costs, and average fixed costs.

4. Define marginal thinking and how and when it can be used to determine the optimal level of production.

5. Explain the importance of financial capital for production decisions.

6. Give examples to explain how businesses and industry depend upon workers with specialized skills to make production more efficient.

7. Define the law of diminishing returns and explain how it is depicted by the total product and marginal product curves.

8. Calculate and graph data concerning the level of production by using profit maximizing rules.

9. Define break-even point and apply break even analysis.

10. Identify resources that are used in the production process.

11. Construct a short-run demand schedule for a resource.

12. Distinguish between internal and external costs.

C o mpe t e n c y: P r oducti o n a n d T r a d e

Tasks

1. Evaluate consumer surplus and producer surplus in markets that import or export, and evaluate the deadweight loss from trade restrictions.

2. Describe how to analyze production possibilities of firms and countries, the sources of comparative advantages, and gains from trades.

3. Define how production possibilities schedules and graphs illustrate the concepts of scarcity, choice, and cost.

4. Define and calculate absolute and comparative advantages for production and exchange.

5. Explain how nations benefit from free trade.

6. Define ways in which societies determine allocation, efficiency, and equity.

7. Explain how and why the production possibilities frontier shifts.

8. Identify and explain various illegal trade activities.

9. Explain the impact international trade has in microeconomics.

10. Explain the concept of derived demand.

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Competency: Supply and Demand

Tasks

1. Explain the law of supply, the law of demand, and equilibrium price.

2. Learn the assumptions and determinants of supply and demand in order to use models of markets for description, analysis, and prediction.

3. Explain the basic theories behind consumer behavior (demand) and producer behavior (supply) constrained by the scarcity of valuable resources.

4. Use supply and demand to predict the likely results of changes in economic conditions and policies.

5. Identify and explain the variables which cause a change in demand.

6. Define topics of market analysis including signaling, rationing, scarcity, shortage, and inadequacy.

7. Describe the impacts of price floors and ceilings.

8. Interpret supply and demand curves that show increases and decreases in quantity supplied and quantity demanded.

9. Appraise the effects of technological changes, changes in consumer preferences, price inputs, environment, andlegislation on supply and demand and price of goods/services.

10. Describe the concept of elasticity and inelasticity and analyze elasticity as it applies to supply and demand andconsumer decisions.

11. Describe how relative prices affect the buying and selling decisions of consumers and producers and illustrate how a change in price affects quantity demanded or quantity supplied.

12. Discuss the effects of shortages in supply and/or demand on the relative scarcity, price, and quantity of particular products.

The topics listed below are prioritized, listing first the most important content areas of the test. Production and trade Opportunity cost Supply and demand Elasticity Labor markets and wages Perfect competition Monopolies Oligopolies and duopolies Production factors Capital and natural resource markets Distribution of income and wealth Market failure Economic uncertainties

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References:

Career Cluster Resources for Marketing, Sales & Service. 2012. National Association of State Directors of Career TechnicalEducation Consortium. Washington, DC.

Career Cluster Resources for Business, Management and Administration. 2012National Association of State Directors of Career Technical Education Consortium. Washington, DC.

Career Cluster Resources for Finance. 2012. National Association of State Directors of Career Technical EducationConsortium. Washington, DC.

Business Education Standards. National Business Education Association. Reston, VA.

Microeconomics in Context Student Study Guide. 2008. Global Development and Environment Institute, Tufts UniversityMedford, MA.

Principles of Economics Course Competencies. Georgia Technical College, Atlanta, GA. Principles of

Microeconomics Course Syllabus. Tennessee Tech University, Cookeville, TN. Introduction to Microeconomics

Course Outline. Lewis and Clark Community College, Godfrey, IL. Microeconomics Course Outline. 2009.

Merced College, Merced, CA.

Principles of Microeconomics Course Syllabus. MIT, Cambridge, MA.

Principles of Microeconomics Course Syllabus. 2010. West Virginia University, Morgantown, WV.

Principles of Microeconomics Course Outline. Cuyahoga Community College, Cleveland, OH.

Economic and Policy Course Syllabus. Georgia Institute of Technology, Georgia Tech University, Atlanta, GA.

http://issuu.com/shanecataract/stacks/6045c4fa58c04341920e292bb489e669

http://ocw.mit.edu/ans7870/14/14.01SC/MIT14_01SCF11_rttext.pdfhttp://www.freewebs.com/econhelp/AP%20MICRO%20REVIEW%20NOTES.pdfhttp://www.craigfalk.com/econ/econfiles/Micro_Bk_Notes_80p.pdfhttps://quizlet.com/24987587/ap-microeconomics-terms-2014-flash-cards/http://www.econmentor.com/college-micro/http://www.sparknotes.com/economics/http://fisher.jsc.vsc.edu/microecon/micro.htmlhttp://www.economicshelp.org/microessays/http://www.mrmedico.info/microeconomics.htm

Practice Exams:http://www.ase.tufts.edu/gdae/publications/textbooks/micstudyguide/completestudyguide.pdfhttp://www.craigfalk.com/econ/econfiles/Review/Micro_Prac_2014.pdfhttp://ocw.mit.edu/courses/economics/14-01sc-principles-of-microeconomics-fall-2011/midterm-exam-1/http://ocw.mit.edu/courses/economics/14-01sc-principles-of-microeconomics-fall-2011/midterm-exam-2/http://ocw.mit.edu/courses/economics/14-01sc-principles-of-microeconomics-fall-2011/final-exam/http://www.fbla-pbl.org/docs/ct/exams/PBL/cmicroeconomics.pdfhttp://www.fbla-pbl.org/docs/ct/exams/PBL/microeconomics.pdfhttp://college.cengage.com/economics/taylor/econ/3e/micro/students/ace/index.htmlhttp://fbla.testfrenzy.com/index.phphttp://issuu.com/smtb/docs/microeconomics_parkin_11th_edition__59d0b33cb98f10

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Competency: Capital and Natural Resource MarketsTasks

1. Describe how firms determine the quantity of resources to use and what determines resource supply in competitive markets and imperfectly competitive markets.

a.

2. Define the types of capital.a. Natural Capital is any stock or flow of energy and material that produces goods and services. It includes:

Resources - renewable and non-renewable materialsb. Human Capital consists of people's health, knowledge, skills and motivation. All these things are needed for

productive work. Enhancing human capital through education and training is central to a flourishing economy.c. Social Capital concerns the institutions that help us maintain and develop human capital in partnership with others;

e.g. families, communities, businesses, trade unions, schools, and voluntary organizations.d. Manufactured Capital comprises material goods or fixed assets which contribute to the production process rather

than being the output itself – e.g. tools, machines and buildings.e. Financial Capital plays an important role in our economy, enabling the other types of Capital to be owned and

traded. But unlike the other types, it has no real value itself but is representative of natural, human, social or manufactured capital; e.g. shares, bonds or banknotes.

3. Discuss the limitations of substitutability with respect to natural capital.a.

4. Describe why social capital is important for economic activities.a. Social capital is important for the development of human capital

5. Discuss how the value of capital stock is determined.a.

6. Describe the concept of discounting.a. The process of determining the present value of a payment or a stream of payments that is to be received in the

futureb. Formula for discounting, where t is the number of years in the future and i is the discount rate:

Present Value = Future Value / (1+i)^t )7. Explain the difference between the economistic and ecological view of natural capital.

a.8. Discuss the role of financial capital markets in business decisions.

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a.

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Competency: Distribution of Income and WealthTasks

1. Define the difference between wealth and income.

2. Define how the distribution of personal income in an economy is measured and discuss issues related to income distribution. Lorenz curve- a line used to portray an income distribution, drawn on a graph with percentiles of households on the

horizontal axis and the cumulative percentage of income on the vertical axis Gini ratio- a measure of inequality, based on the Lorenz curve, that goes from 0 (perfect equality) to 1 (complete

inequality)3. Define and explain the functional and personal distribution of income.

4. Explain the determinants of income distributions.

5. Discuss how trade can expand a society’s consumption opportunities.

6. Describe the distribution of income and wealth in the United States.

7. Describe how inequality is measured.

8. Present different definitions of equity.

9. Explain how government’s redistribution of income through taxation, spending, and assistance/entitlement programs affects

the well-being of people and businesses in an economy.

10. Explain how subsidies effect income distribution and economic growth.

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Competency: Economic UncertaintiesTasks

1. Describe what is meant by economic uncertainty.2. Discuss three standard ways of modeling choices made under conditions of uncertainty.3. Describe the difference between risk and uncertainty.4. Explain consumer behavior under uncertainty.5. Differentiate between intermediate and final goals.6. Discuss the relationship between economics and well-being.7. Summarize the differences between the three spheres of economic activity.8. Understand what is meant by “economics in context.”

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Competency: ElasticityTasks

1. Use concepts of elasticity of demand and supply to evaluate quantitatively economic situations.2. Describe how elasticity is calculated and its relevance to understanding markets.3. Identify and interpret the relationship between price elasticity of demand and the effect of a price change on total revenue.4. Define, calculate, and interpret cross elasticities and income elasticities of demand.5. List and explain the determinants of elasticity.6. Define and differentiate between substitutes and complements.7. Calculate and explain the determinants of price elasticity of supply.8. Explain long elasticity and tax incidence.9. Understand the income and substitution effects of a price change.10. Define and illustrate equilibrium.11. Discuss the differences between short-run and long-run elasticities.

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Competency: Labor Markets and WagesTasks

1. Explain how the marginal productivity theory of resource demand applies to wage rate determination.a.

2. Explain how the wage rate is determined.a.

3. Calculate and determine wage rates in a competitive labor market and in a monopolistic labor markets.a.

4. Explain the effects of unions and specific union tactics on wages and employment in both competitive and monopolistic markets.

a.5. Evaluate the efficiency of specific legislation aimed at increasing wage rates and employment.

a.6. List and describe the factors that affect worker productivity.

a.7. Discuss how individuals make decisions about entering the market for paid labor.

a.8. Describe the interaction of supply and demand in the aggregate labor market.

a.9. Explain variations in wages among workers, including wage discrimination based on race and gender.

a.10. Explain how wages are affected by the market value and productivity of the individual working.

a.11. Discuss wage differences among jobs and professions, using the laws of demand and supply and the concept of productivity.

a.

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Competency: Market FailureTasks

1. Discuss how to use the concepts of equity, efficiency, and market failure to analyze and evaluate government policies such as price floors and ceilings, tax policy, and environmental policy.2. Define and explain the effects of price ceilings and price floors.3. Identify areas of actual/potential market failure.4. Discuss causes of market failure and possible means of correction.5. Describe types of government policy interventions used to overcome or prevent market failure.6. Explain the effect of market failure on the economy.7. Define four essential economic activities8. Describe what is necessary for markets to function effectively.

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Competency: MonopoliesTasks

1. Define monopoly and explain the conditions under which it functions.2. Analyze the behavior of firms in a monopoly and calculate the resulting changes in producer or consumer surplus.3. Identify and graphically construct the demand, average revenue, and marginal revenue curves for a pure monopolist.4. Compare and contrast operations of a monopoly with that of a perfect competitor.5. Illustrate and explain market inefficiencies related to monopolies.6. Define and explain different types of pricing in order to regulate monopolies.7. Define and explain the nature of anti-trust laws.8. Explain the concept of a bilateral monopoly and its effects on employment and wages.9. Describe how a monopolist maximizes profits.10. Discuss the historical development of public purpose organizations regarding the regulation of monopolies and trade practices.11. Determine the role of government in preventing private monopolies and regulating public monopolies.

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Competency: Oligopolies and DuopoliesTasks

1. Define oligopoly and discuss firm behavior under conditions of oligopoly.2. List characteristics of an oligopoly firm.3. List the major barriers that keep companies from joining oligopolies.4. Discuss the pros and cons of oligopolies.5. Define duopolies.6. Discuss the Cournot Duopoly, Bertrand Duopoly, and Stackelberg Duopoly.

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Competency: Opportunity CostTasks

1. Define and compute opportunity cost.a. opportunity cost - the value of the next-best alternative, foregone when a choice is made 

2. Explain the concept of opportunity costs.3. Differentiate between explicit costs and implicit costs.4. Relate the marginal theory of value and the theory of time and money in production.5. Provide an example of the application of opportunity costs.6. Analyze the concepts of trade-offs and opportunity cost.7. Ascertain why scarcity faces people at all times and interprets the relationship between trade-offs and opportunity costs.8. Compare opportunity cost, marginal benefit, and marginal cost.9. Demonstrate how opportunity costs affect economic decisions.

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Competency: Perfect CompetitionTasks

1. Define perfect competition and explain the conditions under which it functions.2. Learn characteristics of the categories of competition in markets.3. Identify and determine the short-run supply curve for a perfect competitor.4. Construct and describe the long-run market supply curve in the case of a perfectly competitive market for a constant cost and an increasing cost market.5. Compare perfect competition with imperfect competition.6. List the assumptions behind the traditional model of perfectly competitive markets.7. Describe how the situation facing the individual firm relates to the overall market situation, in perfect competition.8. Indicate how firms maximize profits under perfect competition.9. Explain how, under certain conditions, a perfectly competitive market is economically efficient.

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Competency: Production FactorsTasks

1. Define factors of production (e.g., labor, capital, entrepreneurship, and natural resources.)2. Explain and show graphically how production and pricing decisions are made for firms in each of these market structures.3. Define, explain, and calculate total product, marginal product, average product, total costs, total fixed costs, total variable costs, average costs, average variable costs, and average fixed costs.4. Define marginal thinking and how and when it can be used to determine the optimal level of production.5. Explain the importance of financial capital for production decisions.6. Give examples to explain how businesses and industry depend upon workers with specialized skills to make production more efficient.7. Define the law of diminishing returns and explain how it is depicted by the total product and marginal product curves.8. Calculate and graph data concerning the level of production by using profit maximizing rules.9. Define break-even point and apply break even analysis.10. Identify resources that are used in the production process.11. Construct a short-run demand schedule for a resource.12. Distinguish between internal and external costs.

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Competency: Production and TradeTasks

1. Evaluate consumer surplus and producer surplus in markets that import or export, and evaluate the deadweight loss from trade restrictions. When a Nation Imports - A nation will import a good when the world price is below the domestic market

equilibrium price. This is because the lower world price has a higher demand. Fewer producers are willing to supply product at the low rate, which creates a domestic shortage. A lower world price also reduces producer surplus and increases consumer surplus. That means consumers benefit from an import, while producers are

harmed. When a Nation Exports - When a nation exports, consumer surplus is decreased because of the higher rates, and

producer surplus increases because they benefit from more revenue. The difference between the quantity supplied, and the actual quantity demanded is the amount of surplus product. This is the same amount that gets

exported. A tariff is a tax on a good that is imposed by the importing country when an imported good crosses its

international boundary

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A quota is a quantitative restriction on the import of a good that limits the maximum quantity of a good that may be imported in a given period.

2. Describe how to analyze production possibilities of firms and countries, the sources of comparative advantages, and gains from trades. The theory of comparative advantage states that if countries specialize in producing goods where they have a

lower opportunity cost

The opportunity cost of producing a T-shirt is lower in China than in the United States, so China has a comparative advantage in producing T-shirts.

The opportunity cost of producing an airplane is lower in the United States than in China, so the United States has a comparative advantage in producing airplanes.

Both countries can reap gains from trade by specializing in the production of the good at which they have a comparative advantage and then trading.

Both countries are better off.

3. Define how production possibilities schedules and graphs illustrate the concepts of scarcity, choice, and cost. A production possibilities curve shows the combinations of two goods an economy is capable of producing. The downward slope of the production possibilities curve is an implication of scarcity. The bowed-out shape of the production possibilities curve results from allocating resources based on comparative advantage. Such an allocation implies that the law of increasing opportunity cost will hold. An economy that fails to make full and efficient use of its factors of production will operate inside its production possibilities curve. Specialization means that an economy is producing the goods and services in which it has a comparative advantage.

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4. Define and calculate absolute and comparative advantages for production and exchange.

5. Explain how nations benefit from free trade.

6. Define ways in which societies determine allocation, efficiency, and equity.

7. Explain how and why the production possibilities frontier shifts. If there is an increase in land, labor or capital or an increase in the productivity of these factors, then the PPF

curve can shift outwards enabling a better trade off.8. Identify and explain various illegal trade activities.

9. Explain the impact international trade has in microeconomics.

10. Explain the concept of derived demand.

derived demand - demand for an input that is based on demand for the output it will help to produce

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Competency: Supply and DemandTasks

1. Explain the law of supply, the law of demand, and equilibrium price. Law of Supply – Price increase, Qs increase Law of Demand – Price increase, Qd decrease

2. Learn the assumptions and determinants of supply and demand in order to use models of markets for description, analysis, and prediction.

Supply An increase in supply occurs when more is supplied at each price, this could occur for the following

reasons:1. An decrease in costs of production, this means business can supply more at each price. Lower costs

could be due to lower wages, lower raw material costs2. An increase in the number of producers will cause an increase in supply3. Expansion in capacity of existing firms, e.g. building a new factory4. An increase in supply of a related good e.g. beef and leather5. Climatic conditions are very important for agricultural products6. Improvements in technology, e.g. computers, reducing firms costs7. Lower taxes reduce the cost of goods8. Increase in government subsidies will also reduce cost of goods

DemandDiagram to show shift in demand

A shift to the right in the demand curve can occur for a number of reasons:

1. Income. An increase in disposable income enabling consumers to be able to afford more goods. Higher income could 

occur for a variety of reasons, such as higher wages and lower taxes.

2. Quality. An increase in the quality of the good e.g. better quality digital cameras encourage people to buy one.

3. Advertising can increase brand loyalty to the goods and increase demand. For example, higher spending on advertising

by Coca Cola has increased global sales.

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4. Substitutes. An increase in the price of substitutes, e.g. if the price of Samsung mobile phones increases, this will

increase the demand for Apple iPhones – a major substitute for the Samsung.

5. Complements. A fall in the price of complements will increase demand. E.g. a lower price of Play Station 2 will increase

the demand for compatible Play Station games.

6. Weather: In cold weather there will be increased demand for fuel and warm weather clothes.

7. Expectations of future price increases. A commodity like gold may be bought due to speculative reasons; if you think it

might go up in the future, you will buy now.

3. Explain the basic theories behind consumer behavior (demand) and producer behavior (supply) constrained by the scarcity of valuable resources.

4. Use supply and demand to predict the likely results of changes in economic conditions and policies.

5. Identify and explain the variables which cause a change in demand.

6. Define topics of market analysis including signaling, rationing, scarcity, shortage, and inadequacy.

The signaling function of the market refers to the market's ability to carry information throughout the economy, for example about what goods people want and how readily those goods can be produced.

The rationing function of the market refers to its function in determining who gets what quantity of any given resource.

Scarcity- resources are scarce to the extent that they are not sufficient to allow all goals to be accomplished at once  Shortage- a situation in which the quantity that buyers wish to buy at the stated price is greater than the quantity that

sellers are willing to sell at that price  Inadequacy- a situation in which there is not enough of a good or service, provided at prices people can afford, to

meet minimal requirements for human well-being7. Describe the impacts of price floors and ceilings.

A price floor is a government- or group-imposed price control or limit on how low a price can be charged for a product. A price floor must be higher than the equilibrium price in order to be effective. Causes Surplus

A price ceiling is a government-imposed price control or limit on how high a price is charged for a product. Causes Shortage

An ineffective, non-binding price floor, below equilibrium price.

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An effective, binding price floor, causing a surplus (supply exceeds demand).

8. Interpret supply and demand curves that show increases and decreases in quantity supplied and quantity demanded.

9. Appraise the effects of technological changes, changes in consumer preferences, price inputs, environment, and legislation on supply and demand and price of goods/services.

10. Describe the concept of elasticity and inelasticity and analyze elasticity as it applies to supply and demand and consumer decisions.

11. Describe how relative prices affect the buying and selling decisions of consumers and producers and illustrate how a change in price affects quantity demanded or quantity supplied.

12. Discuss the effects of shortages in supply and/or demand on the relative scarcity, price, and quantity of particular products.