NEEDS & WANTS
-Never end (Unlimited)
NEEDS
Things that are REQUIRED in order to live
-Ex. Food, water, clean air, clothing & shelter
-Ex. Good Education, Good Job & Safety, Transportation to/from school & work, Health care & medicine
WANTS
Things that add Comfort and Pleasure to your life
-Unlimited
-Change from day to day
MAIN difference between a need and a want
NEED: Is REQUIRED in order to live
WANT: NOT required and adds comfort & pleasure to your life
GOODS
THINGS you can SEE & TOUCH
SERVICES
ACTIVITIES provided for satisfaction of others that are consumed at the same time they are purchased
Largest producer of Goods & Services in the World
United States
Economic Resources (3)
-Businesses produce goods & services using economic resources.
-Economic resources are the things available to be used to produce goods & services
a/k/a Factors of Production (3 types)
-Natural
-Human
-Capital
NATURAL Resources
-Raw material supplied by Nature
-Supply is LIMITED, Increased consumption & damage to the environment threaten availability
Ex. Oil, Minerals, Nutrients needed to grow Crops & Forests, Rivers/Lakes/Oceans sources of food & water, Air.
All Products consum
HUMAN Resources
-The people who produce goods and services
Ex. Farmers, Factory workers, Managers use equipment designed by engineers and manufactured by employees of other businesses to process the food.
Truck drivers, salespeople, advertisers etc.
One Type of Human Resource
Entrepreneur
Entrepreneur
A Risk taker who uses resources to create a new product or service.
-Without the creative ideas of entrepreneurs and their belief that they can develop a successful business, there would be fewer employment opportunities.
Ex. People on shark tank and DC (
CAPITAL Resources
Products & Money used in the productions of goods & services
-People must have access to tools & equipment in order to convert natural resources into products.
ex. buildings, equipment & supplies, including money needed to build a factory, buy vehicles, p
Resources are LIMITED
All economic resources have a limited supply
What is the BASIC Economic Problem
-Individuals & Businesses have UNLIMITED wants & needs
-Economic Resources that can be used to meet their needs are LIMITED
What is Scarcity
NOT having enough resources to satisfy every need.
ex.
-People with limited income have to carefully choose the best way to spend their money just to meet their basic needs.
-Countries with few natural resources or poor education systems may not be able t
What does Scarcity do to your choices
Forces you to make choices among alternatives
Economic Decision Making
The process of CHOOSING which needs and wants will be satisfied.
-Helps you select the best & most satisfying alternative from among a set of choices.
-Once you learn the process, your decision making will be easier and the process may lead to better choi
Trade-Off
When you give up something to have something else
ex. you aren't able to buy a pair of shoes because you decided to spend your money on a movie and pizza with your friends
OPPORTUNITY Cost
The value of the next best alternative that you were not able to choose.
-In making a decision, part of your choice will be what you are GIVING up by the choice you make.
-The benefit you get from your choice should be greater than the benefit front he ne
Example of Opportunity Cost
-If a business uses money to purchase land for a new building, what choices must they give up?
Would there be greater value if they spent the money to purchase new equipment that is faster and more reliable?
Part of the cost of the land is the missed oppo
6 Steps in the Decision-Making Process
1) Define the problem
2) Identify the Choices
3) Evaluate the advantages and Disadvantages of Each
Choice
4) Choose the best alternative
5) Act on your choice
6) Review your decision
What are the THREE Economic Questions
1) WHAT goods and services WILL BE PRODUCED
2) HOW will the goods and services be produced?
3) WHAT NEEDS & WANTS will be satisfied with the goods and services produced?
Economic System
The method a country uses to answer the 3 economic questions
Types of Economic Systems (4)
-Command Economy
-Market Economy
-Traditional Economy
-Mixed Economy
# 1 Command Economy
The resources are owned & controlled by the government
-PERSONAL ECONOMIC CHOICES ARE LIMITED
-Limited choice & supply of consumer goods (basic
goods like bread
-Command Economic System = COMMUNISM
-government officials decide what & how goods are produce
# 2 Market Economy
The resources are owned & controlled by the people of the country
-3 economic questions are answered by individuals through buying & selling of goods & services in the marketplace
Marketplace
Anywhere that goods & services exchange hands
-No one directs consumers to make a particular
purchase or tells businesses what they must
produce.
-The government has limited involvement in a market
economy.
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Economic Decisions
-When you decided to buy a good or service
-Consumers & Businesses make decisions based on
their own self-interest
-Every time consumers buy products in the
marketplace, they "vote" with their dollars
Examples of Economic Decisions
-order a movie on deman
# 3 Traditional Economy
-Goods & Services are produced the way it has always
been. Established by TRADITIONS, generation after
generation
-Centered on on meeting the basic needs of people
food, clothing & shelter
-Lack the many formal structures found in more
advanced systems, u
# 4 Mixed Economy
-Most nations operate a mixed economy
-Combines elements of the COMMAND & MARKET
economies
-Gov't makes many of the decisions about how the
country's resources will be used to develop schools,
hospitals, roads, and utilities.
-As people become educated &
What is the US Economic System
Free Enterprise or Private Enterprise
Capitalism
The Private ownership of economic resources by individuals, rather than by the government.
Four Important Principles of Capitalism
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What is a Consumer
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What is a Producer
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What is Demand
The quantity (amount) of goods or services that consumers are willing and able to BUY
Consumers Set demand
What is Supply
The quantity of a good or service that businesses are willing and able to PROVIDE
Producers establish Supply
What is Determining Price
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Factors that influence Demand
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Factors that influence Supply
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What is Market Price
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