05/01/16
Chapter 1: The Power of Markets
Learning Objective: I can define the role and significance of price in a market economy.
DA: Define microeconomics.
DA: Define microeconomics.
Please read Chapter 1: The Power of Markets and answer the following quesitons. Each question is worth three points and to receive full credit you must reference the text within your answer.
1. What are the two basic assumptions that economist make about individuals?
2. What does it mean to “maximize your utility?
3. What are some “barriers to entry” that make it so only seller can provide a good or service? Why are barriers to entry important?
4. What is the role and significance of price in a market economy?
5. Besides prices, what is another way that firms can compete in order to outperform their competition?
6. According to Wheelan, what makes markets a good way to organize economic activity?
7. What does Wheelan mean when he says the market economy operates as an “amoral force?”
8. Identify a particular concept you found most interesting and briefly explain why.