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Chapter 1Economic Decisions and
Systems
Chapter 1
THE BIG IDEA…Businesses make money by offering goods and services to satisfy the wants and needs of consumers and other businesses. In this way, wants and needs drive the U.S. Economy.
Chapter 1 VOCABULARY
GoodsPhysical products.
ServicesTasks business preform for other people.
Chapter 1
Good or service?
Chapter 1
Good or service?
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Good or service?
Chapter 1
Good or service?
Chapter 1
Good or service?
Chapter 1 VOCABULARY
WantsThings that you do not have, but would like to have.
NeedsThings that you must have in order to survive.
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Need or want?
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Need or want?
Chapter 1
Need or want?
Chapter 1
Need or want?
Chapter 1
Need or want?
Chapter 1 VOCABULARY
Needs and Wants…determine what products and services businesses provide.
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Economic Resources• Items that people can use to make or obtain
what they need or want.• The means through which goods and services
are produced.• Also called Factors of Production
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Resources
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Natural ResourcesRaw materials supplied by nature.
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Human ResourcesPeople producing goods and services.
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Capital ResourcesThe products and money used in the production of goods and services.
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ResourcesNo one has enough resources to satisfy all their needs and wants.
Resources are limited.
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ScarcityNot having enough resources to satisfy every need.
Example:Your allowance is $20 a week. Is this enough money to satisfy all your needs and/or wants?
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Economic decision-makingThe process of choosing which wants will be satisfied.
TradeoffWhen you give up something to have something else.
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Opportunity Cost• The value of the next-best alternative that you
did not choose• What you give up when you make a decision
Decision Opportunity CostDo your homework Watch TVGo on a vacation Save moneyStay home See your friends
Chapter 1Need advice…You have a decision to make. Your best friend called and told you they have tickets to a concert you’ve been wanting to go to TONIGHT. However, you’ve already promised your family that you would go to dinner with them for your Dad’s birthday. It’s impossible to do both. You really want to go to the concert but don’t want to cause hard feelings with your dad or family. How do you go about making this decision?
Chapter 1Decision Making Process
1. Define the problem.2. Identify the choices.3. Evaluate the advantages and disadvantages of each choice.
4. Choose one.5. Act on your choice.6. Review your decision.
• Command Economy – Resources are owned and controlled by the government.
• Market Economy – Resources are owned and controlled by the people of the country.
• Traditional Economy – Goods and services are produced the way it has always been done. (used in less developed countries)
• Mixed Economy – combines elements of the command and market economies.
Types Economic Systems
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Competition• The contest between businesses to win
customers.• The rivalry among businesses to sell their goods
and services.
Chapter 1 Section 1.2
Competition
Chapter 1 Section 1.2
Competition happens when…businesses continually try to improve their products and services and do better than one another.
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ConsumerA person who buys and uses goods or services.
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ProducerIndividuals and organizations that determine what products and services will be available for sale.
• Supply – the amount of goods and services that producers will provide at various prices.
Supply
If consumers are willing to pay more
for a good or service
Then sellers are willing to supply more of that
good or service
• Demand – is the amount or quantity of goods and services that consumers are willing to buy at various prices.
Demand
Consumers are willing to consume more of a good or service at a
lower price
Market Price
• Market Price – is the point at which the quantity demanded and the quantity supplied meet.
The Lemonade Stand
http://www.primarygames.com/socstudies/lemonade/start.htm
How well can you balance supply and demand?