understands the role of self-interest in competetive markets.

understands that people respond to incentives in order to allocate scarce resources in ways that provide them with the highest possible returns.

understands various market structures (monopoly, oligopoly, perfect competition, monopolistic competition).

understands the components of gross domestic product.

understands different methods for classifying income distribution.

understands the causes and effects of inflation.

explains that profit maximization occurs when marginal benefits exceed marginal costs.

describes the factors that encourage competition (e.g., ease of entry, availability of consumer information, quantity of substitute goods and services).

demonstrates how technology and entrepreneurship affect competition, choice, and prices.

applies game theory to analyze how collusion reduces competition in a market.

demonstrates the limitations of gross domestic product as a reflection of a society's standard of living.

describes how gross domestic product, technology, public policy, and supply and demand in the labor market can influence personal income.

explains the difference between personal income distribution and functional income distribution.

compares and contrasts frictional, structural, cyclical, and seasonal unemployment.

explains that the costs of inflation are different for different groups of people.

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