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Chapter 13 What is an Economy?

Section 1 Why Societies Have Economies. Chapter 13 What is an Economy?. People’s Many Wants. In an economic system, scarce resources are used to produce and distribute goods and services that satisfy people’s needs and wants. The more we have the more we want. People’s Many Wants.

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Chapter 13 What is an Economy?

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  1. Section 1 Why Societies Have Economies Chapter 13 What is an Economy?

  2. People’s Many Wants • In an economic system, scarce resources are used to produce and distribute goods and services that satisfy people’s needs and wants. • The more we have the more we want.

  3. People’s Many Wants • Basic Needs • Food, clothing, shelter • Wants • People are usually not satisfied with having their basic needs/wants met. • People have seemingly endless wants outside of the basic necessities of life.

  4. Using Resources • Factors of Production: the resources people use for producing goods and services to satisfy their wants. • Use the acronym CELL for the factors of production • Capital= Anything produced in an economy that is used to produce other goods and services • Entrepreneur= A person who starts a business. • Land= This deals with the natural resources needed to produce goods. • Labor= includes time and energy. Labor also includes knowledge about a product or service.

  5. Production to Consumption • FIRST:A consumer has wants and needs • SECOND:A producer produces • Using CELL • Making decisions like, who are you producing for, how to produce, when to produce, and how much to produce. • THIRD:A product is distributed • Finally:A consumer consumes • The act of buying or using people’s goods or services.

  6. Making Choices • Benefits • What will a particular economic decision result in? • Costs • Opportunity Cost is the highest valued benefit given up when a choice is made.

  7. Scarcity • This is the term which signifies how resources are limited compared with the number and variety of wants people have. (not enough product to meet the needs of the consumers.) • Deals with the relationship between wants and needs. • The idea of scarcity is not just based on the total amount of resources in a society; it is based on the relationship between wants and the resources available to satisfy them.

  8. Scarcity • Resources can be limited for several reason. 1st fighting for the resources. (Land needed for farming is used for factories.) 2nd shortages also happen because of demand. High demand low supply. 3rd the factories may limit supply of product. (limiting their resources

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