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Economic Decisions and Systems

This chapter discusses the concepts of needs and wants, economic choices, economic systems, and supply and demand. Students will learn the difference between needs and wants, the types of economic resources, the decision-making process, the three economic questions, and the U.S. economic system. They will also understand how supply and demand affect prices of products and services.

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Economic Decisions and Systems

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  1. CHAPTER 1 Economic Decisions and Systems 1-1 Satisfying Needs and Wants 1-2 Economic Choices 1-3 Economic Systems 1-4 Supply and Demand

  2. 1-1 Satisfying Needs and Wants Learning Target: Students will be able to: Explain the difference between needs and wants. Distinguish between goods and services. Describe the types of economic resources.

  3. Chapter 1 NEEDS AND WANTS • Needs are essential • Wants add to the quality of life • Needs and wants are unlimited

  4. Chapter 1 Natural: water, land, trees, animals, and minerals. Human: labor (people who run farms and factories, transport goods, provide services, or manage businesses). Capital: money, land, buildings, tools, and equipment ECONOMIC RESOURCES

  5. 1-2 Economic Choices Learning Target Students will: Understand the basic economic problem. Explain the steps in the decision-making process.

  6. Chapter 1 THE DECISION-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.

  7. 1-3 Economic Systems Learning Target Students will be able to: Identify the three economic questions. Differentiate among the main types of economic systems. Describe the economic system of the United States.

  8. Chapter 1 THE THREE ECONOMIC QUESTIONS • What to produce? • How to produce? • What needs and wants to satisfy? • A nation’s plan for answering these three questions is called it’s economic system.

  9. Chapter 1 TYPES OF ECONOMIC SYSTEMS • Command economy – resources are owned and controlled by the government • Market economy – resources are owned and controlled by the people • Traditional economy – good & services produced the same; less developed countries • Mixed economies – combines elements of command and market economy

  10. Chapter 1 THE U.S. ECONOMIC SYSTEM Four principles of the U.S. economic system: • Private property • Freedom of choice • Profit • Competition

  11. 1-4 Supply and Demand Learning Target Students will be able to: Describe supply and demand. Discuss how supply and demand affect prices of products and services.

  12. Chapter 1 PARTICIPATING IN A MARKET ECONOMY • Consumers set demand • Producers establish supply

  13. Checkpoint >> How does the price of a product affect demand and supply? Chapter 1 Answer • As prices decrease, the number of consumers willing and able to purchase the product will increase and demand will rise. • As prices increase, the number of consumers willing and able to purchase the product will decrease and demand will decrease.

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