INTRO TO ECONOMICS

1. INTRO TO ECONOMICS Economics – the study of _________ and how and why it is produced, used, and traded by individuals and nations. Value is produced in either of two ways: ___________ – items that are grown or manufactured (food, clothes, cars, etc) ___________ – jobs or chores people do for other people. (doctor, waiter, etc). Goods & Services (______) are created or performed by ___________ and bought by ___________ ALL PEOPLE AND NATIONS ARE BOTH PROD. AND CONS. ______________ – focus on individual economic choices ______________ – focus on how countries make economic choices

2. I‘M GOING TO GIVE SOMEONE THE PEN. WRITE DOWN SOMETHING IN YOUR LIFE THAT YOU VALUE THE MOST AND WE WILL DETERMINE IF IT IS A “GOOD” OR A “SERVICE”…I KNOW, EXCITING STUFF!! What Do You Value?

3. Two Types of Economics • _____________ – focus on individual economic choices • ____________ – focus on how countries make economic choices

4. Needs and Wants • ________ – something we have to have in order for survival – food, water, shelter, clothing • ________ – Things we would LIKE to have, like vacation, enormous sums of money, big pimpin’ cars, etc.

5. Needs and Wants WE GET TO PASS THE PEN AROUND AGAIN! WRITE DOWN ONE THING YOU THINK IS A NEED AND ONE YOU THINK IS A WANT.

6. INTRO TO ECONOMICS Each country produces goods and services using two types of resources: ______Resources – items that exist on earth (water, air) ______ Resources – people and their abilities: including labor, skills, knowledge. All countries, and people, lack some resource – this is called ______________* - a shortage of or total absence of a resource Scarcity forces countries and people to make economic decisions called ___________– giving up one thing in order to get ____________ else. The “something” that is given up is called an __________ Cost – what is given up or lost in a trade off

7. Example of Scarcity/Opportunity Cost • http://education-portal.com/academy/lesson/opportunity-cost-definition-real-world-examples.html

8. INTRO TO ECONOMICS People face a scarcity of value, or money, which is anything another person will accept as payment for a good or service The PRICE of a good or service, which affects scarcity, is determined by 3 factors: __________ 2. __________ 3. ___________ Supply and Demand are the most important concepts in economics and are _________________in how they function Supply – amount of a good or service available * Supply is controlled by _______________ (want to make $) Demand – amount of a good or service that consumers are willing/able to buy * Demand is controlled by __________________ (want to save money)

9. **Supply and Demand Scenarios** When the supply of a good or service is ______ and the demand is _______, the price is the _________. When the supply of a good or service is _______ and the demand is _____, the price is the _________ When the supply of a good or service is ____ and the demand is ____, the price will be ______ When the supply of a good or service is ______ and the demand is ______, the price will be ________. Generally, as the price goes up, the demand goes down/ as the price goes down the supply goes down.

10. INTRO TO ECONOMICS ____________– the balance that usually exists between what consumers will pay and what producers will charge When shown on a demand curve, it is known as the ______________ point because supply and demand are equal. This is usually the price consumers pay for the good or service. A _________ (lack of good or service) may cause prices to rise while a __________(overabundance of a good or service) may cause prices to fall. __________ Demand – demand remains constant regardless of price (i.e. medicine)

11. INTRO TO ECONOMICS How does Price affect Demand? Changes in price also usually affect demand for ______________ items, such as sugar and cream for coffee Changes in price may also affect demand for ___________ items, or items that take the place of other items. Example – tea may be a sub for coffee if price of coffee is too high. We are able to see these in Supply and Demand Curves:

12. INTRO TO ECONOMICS _______________ – forces producers to produce higher quality goods and services at the lowest possible price, since consumers have a scarcity of money and make purchases based upon price more than any other factor. COMPETITION IS ___________ FOR CONSUMERS! Producers sell a product at the ____________ possible price, assuming they make the profit they determined beforehand. They do this in order to sell the most product. When they stop making profit, they stop producing. A consumer may buy Coke over Pepsi if the price is lower and vice versa depending on their scarcity of money. They may still buy Pepsi at higher price if they prefer taste, but most consumers today buy the cheapest with competitive products

13. INTRO TO ECONOMICS Four elements or factors in the production of a good or service: ______________________– capital is $ used to purchase capital goods, which are machines, tools, buildings, etc. used to produce goods and services ______________________– the resources exist on earth, like trees, soil, water, and electricity needed to produce goods and services _____________ – the human resource provided by humans in the form of workers. – ___________________– used by companies to make more profit; workers focus on a specific job or task. ___________________ – the measurement of a producer’s ability to produce greater quantities in better, faster, and cheaper ways.

14. INTRO TO ECONOMICS 4. ___________– supervises and plans the production of goods and services. Management utilizes the ________ and ____________levels of human resources. Producers attempt to raise _________ by increasing factors of production – i.e. buy more machines, hire more workers. Law of ________________________– the amount of extra output created by an increase in a factor of production, begins to decrease. Forces producers to make cost effective decisions about production.

15. INTRO TO ECONOMICS Entrepreneurs – the people that own the business, risk their own money in hopes ___________. Profit – money after all bills and taxes are paid; profit is always lower than ___________________for the business Gross Income – total amount of money __________ taxes and bills are ________. Producers want to _________ gross income to raise profits Marketing – the “selling” of a good or service, from creation to final sale – includes packaging, _____________, placement and advertising. Determines the “message” of the product – purpose is to increase demand for the product Marketing is usually one of the highest expenses

16. INTRO TO ECONOMICS __________ (a.k.a. “Middleman”)– businesses that buy goods directly from producers, store them in warehouses, and sell them to retailers (stores) at a later time. ___________ – are the stores where consumers usually purchase products at a retail price, making a profit for the retailer. Usually producers make a _______ from the wholesalers, who make a _________ from retailer, who make a ________ from you, the consumer.

17. INTRO TO ECONOMICS 4 Types of Economic Systems ____________ Economy – an economic system in which the gov’t is the primary decision maker and controls the means of production, meaning they control the capital, the capital goods, the natural resources. Commonly found in communist countries: I.E. Cuba, North Korea, China. Advantages: Low _________ for consumers; everyone has a ________ Disadvantages: No __________ means low __________ goods and few choices

18. INTRO TO ECONOMICS 2. _____________ Economy – economic decisions are based upon tradition and tradition establishes the answers to the basic economic questions. Commonly found in many poor African and Asian countries, sometimes called ________________– I.E. Laos and Ghana Advantages – Sense of ____________; general lack of ________ and ________ Disadvantages – Lacks modern ___________; lacks ability to handle obstacles Production is ________________ – over usage of workers to produce a good or service – lack money needed to replace workers with machines

19. INTRO TO ECONOMICS 3. ____________ Economy – the government owns the nation’s major industries (banks, airlines, railroads, power plants) and individuals own the other, generally smaller business. Found in countries with socialist governments. Very common in Europe, I.E. France and Sweden. Advantages: _________ among important national industries; lower ________ for consumers Disadvantages: Options for going into business and making profit are _________; taxes placed upon citizens are very ________

20. INTRO TO ECONOMICS 4. ___________ Economy – economic decisions are determined by individual buyers and sellers, and the means of production is controlled by the individuals, both buyers and sellers. Often referred to as __________________. Capital-____________ – economies use machines and technology to produce goods and services faster, better, and more profitably (I.E. U.S., Japan, Germany) Advantages: High ________ products at lowest possible _______; opportunity to determine one’s worth and profit. Disadvantages: Little protection from ________ prices; no guarantee of ___________________ for workers

21. INTRO TO ECONOMICS Economic Systems: *NO country is 100% communist, socialist, or capitalist* The U.S. is primarily a _________ economy, but does have government regulation demonstrated via __________ and regulations. U.S. is also said to have a _________________________ meaning: The people have the right to own ____________, compete with others, go into business for _______, and buy the best products at the lowest prices. ALL countries have ___________________ economies (free enterprise and government control).

22. INTRO TO ECONOMICS ***In recent years, United States workers have lost thousands of jobs to workers in foreign countries, mostly in Asia and Latin America. Jobs have been moved to these countries due to much lower labor costs. The United States has a minimum wage for its workers, and regulations for producers, while most of these countries do not. Corporations have moved production of goods to these countries to lower labor costs, and increase profits.*** Minimum Wage: U.S. - $7.25 China - $0.57 Mexico - $2.48 India - $2.90 Is outsourcing a good thing??Is Outsourcing a Good Thing? - ABC News

23. INTRO TO ECONOMICS In a market economy, producers generally choose from 3 Business organizations when establishing “for-profit”: ____________________________________– business owned/operated by one person (proprietor) – 75% of businesses in the US are this __________________ – business owned and operated by 2 individuals. – About 2 million in US (7%). Often doctors, lawyers, etc. Advantages – more capital to start business; workload shared Disadvantage – Disagreements #1 problem; financial risk 3. ___________________ – large business, with ownership divided into many parts, called shares of stock.

24. Intro to Economics • Corporations continued: About _____ million corporations in the United States (______% of business) • Individuals who purchase stock are called ____________. These are the owners of business. The more shares of stock you own, the more influence you have. • Corporations are licensed by the state in which the operate on a corporate ____________________. • Advantages: 1. Limited ______________ – will only lose the amount of money you have invested. 2. Easy transfer of _______________. 3. Unlimited ________ of business • Disadvantages: 1. Costly and Complicated to set up; 2. Owners suffer double taxation