1.Understand the circular flow diagram. In this model, households _______ resources and ______ products while businesses _________ resources and _________ products.

2.Understand the determinants of supply and demand.

a.An increase in the supply of a product will _________ equilibrium price and _________ equilibrium quantity.

b.An increase in the demand for a product will __________ equilibrium price and _________ equilibrium quantity.

3.Know the difference between a positive and a normative statement.

a.An example of a positive statement is _______________________________.

b.An example of a normative statement is _____________________________.

4.Understand the definitions of inferior and normal goods.

a.If the income of a consumer decreases, and the demand for a product increases, it can be said that good is a _________ good.

b.If the income of a consumer decrease, and the demand for a product decreases, it can be said that good is a _________ good.