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

a. consumers : Someone whose role is to use goods or services.

b. producers : Someone whose role is to provide goods or services.
c. worker : Someone whose role is to make goods or deliver services.
d. business : An organization that hires labor; buys resources to use as inputs for
production; and owns, rents, and operates equipment.
2. List the three important roles consumers play.
1. what goods and services to buy
2. how much to buy
3. how much they’re willing to pay
3. Describe the role producers play.

Satisfy needs and wants of consumers, provide goods and services.

What to produce, how to produce it, for whom to produce

4. Describe what producers have to understand about consumers in order to make their decisions.

What consumers want and how much they’ll pay

5. Explain how workers play a dual role in economics.

They provide goods and services and buy things too

6. Describe the role the government plays in economics.

Guide pace of economy, help maintain steady growth, keep prices stable, and provide public
goods & services (can be consumer & producer)
1. Write down the key terms that match the following definitions.
a. incentive : A cost or benefit that motivates a decision or action.
b. market research : Research into the size, location, and makeup of a product market.
c. peer pressure : The pressure exerted by a person or group that is intended to change
someone's choices or behavior.
d. trend : A general direction of the market, such as a higher demand or supply for a
particular product or service.
2. List some of the factors that influence consumers' decisions.

family, friends, advertisements, what’s available, cost, money they have

3. List some questions that producers ask as they make their decisions.

what do consumers want? What kinds of things will they pay a lot of money for? What kind of
ads do they respond to? How much resources cost? How far away are they? Availability?

4. Describe how producers conduct market research.

surveys or focus groups to test ideas

5. Explain how culture influences consumers' decisions.

Values and traditions
Ex. Sports, holidays

6. Explain how peer pressure and trends influence consumers' decisions.

What your friends buy, pressure to be a certain way

1. Write down the key terms that match the following definitions.
a. rational choice : Logical decision making based on thoughtful analysis that compares the
benefits and costs of an action.
b. financial planning : Process of creating a strategy to pay for necessities and save for future
goals.
c. budget : A financial plan that spells out expenses, income, and projected savings.
d. income : Money earned or received.
e. expenses : Money spent to pay bills and make purchases.
f. fixed expenses : Expenses that are necessary and generally do not change from one time
period to the next, such as a fiscal quarter or year.
g. flexible expenses : Non-necessary expenses or luxuries that can be adjusted or eliminated.
h. discretionary spending : Purchases based on a person's wants, not needs.
i. assets : Things of value that a person or business owns.
2. List two forms that rational choice can take.

cost-benefit, financial planning

3. Describe the purpose of using cost-benefit analysis.

Maximizing benefits, minimizing costs

4. List the benefits of using a budget.

 Know how much money made

 How much money spent
 How much money saved
 Plan for future expenses
 Plan for future savings

5. Describe the difference between short-term and long-term planning.

Short term involves keeping track of and covering all fixed expenses

Long term is planning for the future, look at assets and income

6. Explain why both short-term and long-term planning are important.

Short terms helps fulfill needs and long term allows you to move forward to bigger goals
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. opportunity cost : The benefits of the best alternative option that are given up by a particular
decision.
c. marginal analysis : A decision-making tool that weighs additional costs and benefits of
going for one more unit of something.
2. Describe how utility is used in cost-benefit analysis.

Costs and benefits are measured by satisfaction or utility

3. Describe the difference between monetary and nonmonetary considerations.

Monetary is money while nonmonetary is thing you don’t get instead and time

4. Explain how incentives affect the cost-benefit analysis.

Increase the possible benefits

5. Explain why producers want to increase consumers' utility.

To sell more and maximize profits

1. Write down the key terms that match the following definitions.
a. culture : A set of beliefs, values, and behaviors shared by members of a certain group.
b. values : Standards that guide behavior.
c. beliefs : Ideas that people accept as true.
d. risk aversion : The amount of reluctance a person has to taking chances.
2. List four nonmonetary considerations that influence consumers.

taste, culture, beliefs, values

3. Explain how culture affects consumers' values.

Holidays & sports, rock & roll culture

They’ll want to buy things that have to do something w/ culture

4. Explain how the level of risk aversion affects consumers' decisions.

People with high risk aversion take more certain path even if benefits are small

Low risk do less certain with hopes they’ll get a bigger benefit
1. Write down the key terms that match the following definitions.
a. media : Forms of communicating with an audience.
b. mass media : The means of communicating with a large number of people.
c. news media : Media sources that provide objective information.
d. product placement : Paying to display a product in a movie or TV show.
e. advertising : The promotion of goods, services, companies, and ideas by an identified
sponsor.
f. consumer behavior : How consumers choose to buy goods and services.
g. branding : Making the public aware of a specific brand of a product and associating it with
quality and popularity.
2. List several different types of media.

Mass media- magazines, cinema, newspapers, internet, CD

News- TV news, radio news, newspapers, news magazines

3. Explain how media influence consumer behavior.

TV influences people to be like the characters or celebrities. Magazines influence perceptions of

beauty.

4. Describe the purpose of advertising.

GET CONSUMERS TO DEMAND MORE GOODS

Biggest method used to influence consumer behavior., Influence people to buy their stuff, find
people of their demographics

5. Describe four different advertising techniques.

1. Emphasizing need by showing connection between product and life

2. Branding

3. Connecting to your personality, tell stories, associate good things w product

4. Free advertising

6. Describe how free advertising works.

Not advertising but informing people
7. Describe media scares.
News alert the public to defects, dangers, and recalls getting people to avoid goods
1. Write down the key terms that match the following definitions.
a. profit : Total revenue minus total costs.
b. revenue : The total amount of money brought in by sales.
c. profit motive : The desire to make money out of production.
d. loss : The result of costs being higher than revenue.
e. input : Resources, or factors of production, used to make goods and services.
f. output : The amount and type of goods or services produced.
g. production possibilities fronteir : A graphical description that shows the maximum amounts
of two or more goods a person or group of people can produce given the inputs available.
2. Explain why producers have a big incentive to use cost-benefit analysis and other tools of
financial management.
They want to make money and stay in business. They could lose their producer status.

3. Describe the difference between how producers and consumers use cost-benefit analysis.

Producers only look at monetary affects.

4. Describe how profit is calculated.

Revenue – costs = Profit

5. Explain why producers must have the profit motive.

To remain in business

6. Describe what the profit motive drives businesses to do.

Reduce costs, Increase sales

7. Describe the inputs into production and explain why they cost money.

Land, labor, and capital.Wages for workers, rent for land, money to buy materials.
8. Describe how opportunity costs are related to profits.

You have to think about your choices to decide what will maximize profit?
9. Explain the purpose of the production possibilities frontier.

Shows producers who to set up production in an efficient manner, helps maximize efficiency
10. Explain how market research helps producers maximize profits.

 Researching the price of competition goods

 Find out what consumers are willing to pay
 Determine whether consumers want or need what is being offered
1. Write down the key terms that match the following definitions.
a. competition : When two or more rivals are pursuing the same goal.
b. market structure : The organization and number of producers providing a given good or
service.
2. Fill out the table below by naming the four different market structures, giving the
characteristics of each, and providing an example for each.
Market Characteristics Example
Structure
 Only one producer
 One unique product with no close city’s utility provider
Monopoly substitutes (electricity)
 Producer controls price
 Blocked entry to competitors microsoft

 Many producers
 Slightly different products clothing stores
Monopolistic  Some price control
 Large number of small businesses fast food
(most
common) video rental

 An industry dominated by a small number

of large businesses car industry
Oligopoly  Businesses sell either identical or slightly cameras
differentiated products
 Businesses give incentives instead of airlines
changing prices
phones
 Significant barriers exist to enter industry

 A large number of small businesses

Pure  Identical or easily substituted products ebay
competition  Freedom of entry into and exit out of the
(doesn’t industry
exist)  Perfect knowledge of prices and
technology

3. When economists think about market structures, they include market structures like pure
monopoly and pure competition that are very rare in the real world. Why do economists spend
time thinking about conditions that almost never exist?
Can use it as a standard to analyze real market structures
1. Write down the key terms that match the following definitions.
a. ad rate : The amount of money charged for a particular amount of advertising space.
b. medium : Method of transmitting information.
c. circulation : The number of newspapers or magazines printed and distributed.
d. ratings system : A method of sampling viewers or listeners to estimate the audience size
for a particular show.
e. media conglomerates : Companies that own a large number of media sources in various
formats.
f. centralization of ownership : When a few large companies own most businesses within an
industry.
g. blogging : Web-logging; writing a journal or log on the Internet.
h. instant messaging : Transmitting text messages via the Internet.
i. chat room : A medium for direct online communication.
2. Explain why nearly every business gets involved with the media in some way.
A part of every consumer’s life, everyone consumes it, if they didn’t know one would know
about them

3. Describe the two ways that media companies make money.

 Sell directly to consumers by charging them to buy magazines, cable TV, etc
 Selling advertisements
4. Describe what media companies provide and what advertisers are buying, and explain why
there's a difference.
Media provides content and advertisers buy the audience. Media wants to attract an audience so
they can sell the audience to advertisers.

5. Describe what determines ad rates.

Popularity

6. Describe why and how media companies measure their audience.

They need to get people to use their products so advertisers will want to advertise there and they
can charge more. They measure through medium, circulation, and ratings system.

7. Describe the structure of the media market.

A few large businesses control the market: oligopoly

1. Write down the key terms that match the following definitions.
a. sole proprietorship : A business owned and managed by a single individual.
b. unlimited liability : The owner's personal responsibility for any debts or damages incurred
by the operation of a business.
c. partnership : A business owned and operated by two or more people.
d. general partnership : A business where each partner is fully responsible and has unlimited
liability for the debts of the business.
e. limited partnership : A business where each partner's liability is limited only to his or her
investment in the partnership.
f. limited liability : Liability that is limited to a partner's investment.
g. corporation : A business owned by stockholders that is a legal entity with rights to buy,
sell, and make contracts.
h. share : One unit of ownership in a corporation.
i. stock : A certificate showing a share of ownership in a corporation.
j. stockholder : A holder or owner of one or more shares of the stock of a corporation.
k. board of directors : A group of people elected by the stockholders to run the corporation.
l. dividends : A proportion of a company's profit paid to stockholders.
2. List the different ways that people get the money to open a business.
Use own money, borrow money from bank, take on a business partner, have a third party invest
3. Describe the pros and cons of a sole proprietorship.
Pros- completely in charge, income not corporate taxes, accounting simple, keep profits
Cons- financial risks,
4. Describe the difference between a general partnership and a limited partnership.
General has each partner fully responsible for all debts and they must converse about decisions
while limited is just the amount they contributed and only the partners that manage the business
must converse
5. List the pros and cons of partnerships.
Pros- more partners, more money to invest, only personal income taxes
Cons- working together,
6. Describe why investing in a corporation is an easy and safe way to participate in a business.
Don’t pay attention to decisions, if they don’t like something, vote for a new board or sell stock
7. Fill out the table below by listing and describing the three different types of corporations.
Type of Corporation Description
Private corporation Few people own all the shares, make profit

Public corporation Anyone can buy and sell shares, make profit

Nonprofit corporation Benefit the members or promote a special cause, no

stocks
1. Write down the key terms that match the following definitions.
a. business model : The way a company operates its business.
b. business plan : A description of a company's intended business model.
c. retailer : Someone who sells goods directly to customers.
2. Describe why companies need a business model.
To start a successful business, provides outline on how business will work and will have info that
makes running business easier

3. List the five features of a business model.

1. identifies customers
2. identifies goods offered
3. describes business organization
4. describes how business functions
5. explains how the business generates revenues and profits
4. Fill out the table below by describing each of the business models listed.
Business Description
Model
Shopkeeper Business goes through suppliers or a wholesaler to buy products they sell for a
higher price

Bait and Offering basic product at a low cost and charging greater amounts for refills or
hook equipment related to the product

Subscription Customer pays for subscription and gets sent product, brings in a steady
revenue and predictable profits w renewing them

Cutting out Buying from manufacturer who sends them product directly
the
middleman
Online Customers go to internet and look at products for sale by a variety of people
auction
Bricks and Stores and online shopping
clicks