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

C H A P T E R. 1. Economic Decisions and Systems. 1-1 Satisfying Needs and Wants 1-2 Economic Choices 1-3 Economic Systems 1-4 Supply and Demand. 1-1 Satisfying Needs and Wants. Goal 1 Explain the difference between needs and wants. Goal 2 Distinguish between goods and services.

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

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  1. C H A P T E R 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 Goal 1 Explain the difference between needs and wants. Goal 2 Distinguish between goods and services. Goal 3 Describe the types of economic resources.

  3. KEY TERMS • needs • wants • goods • services • economic resources

  4. NEEDS AND WANTS • Needs are essential to your life • Wants add to the quality of life • Needs and wants are unlimited • Examples? • Different for you and your parents?

  5. Checkpoint  • What is the difference between a need and a want? • Needs are those things required to live, such as food, clothing, and shelter. • Wants are things that add comfort and pleasure to our lives such as television, music CDs, and movies.

  6. GOODS AND SERVICES • What is the difference? • Goods are manufactured and sold • Services are provided • You purchase and use services to satisfy your wants and needs, but unlike goods, businesses must provide services to you at the time you want to consume them.

  7. The U.S. economy • The largest producer • More than the next two combined • China and Japan • Also the largest consumer • Largest consumer of oil • More than the next four combined • Why did this happen? • Shift from agricultural to an industrial economy

  8. Checkpoint  • How do people satisfy their wants and needs? • People satisfy their wants and needs by purchasing and consuming goods and services.

  9. ECONOMIC RESOURCES • Natural resources • Raw materials provided by mother nature • Human resources • People who produce goods and services • Capital resources • Equipment and money used in production • Resources are limited

  10. Checkpoint  • What are the three types of economic resources? Give an example of each type. • 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.

  11. 1-2 Economic Choices Goal 1 Understand the basic economic problem. Goal 2 Explain the steps in the decision-making process.

  12. KEY TERMS • scarcity • economic decision-making • trade-off • opportunity cost

  13. THE BASIC ECONOMIC PROBLEM • What is the Basic Economic Question? • Unlimited wants and needs VS limited economic resources • Scarcity • Not having enough resources to satisfy every need

  14. Economic Decision Making • The process of choosing which needs and wants will be satisfied • Choices • Scarcity forces you to make decisions among the alternatives

  15. Trade-offs and opportunity costs • Trade-offs • When you give up something to have something else • Opportunity Cost • The value of the next-best alternative that you were not able to choose • Examples?

  16. Checkpoint  • What is opportunity cost? • Opportunity cost is the value of the next best alternative that you don’t choose. • It is what you are willing to give up in order to have your first choice.

  17. 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.

  18. Checkpoint  • What are the six steps in the decision-making process? • Define the problem. • Identify the choices. • Evaluate advantages and disadvantages of each alternative. • Choose one. • Act on your choice. • Review your decision.

  19. 1-3 Economic Systems Goal 1 Identify the three economic questions. Goal 2 Differentiate among the main types of economic systems. Goal 3 Describe the economic system of the United States.

  20. KEY TERMS • economic system • command economy • market economy • traditional economy • mixed economy • capitalism

  21. THE THREE ECONOMIC QUESTIONS • What to produce? • How to produce? • What needs and wants to satisfy? • How are they different in different countries?

  22. Checkpoint  • What are the three economic questions? • What goods and services will be produced? • How will the goods and services be produced? • What needs and wants will be satisfied with the goods and services?

  23. TYPES OF ECONOMIC SYSTEMS • Command economy • Resources are owned and controlled by the government of the country • Market economy • Resources are owned and controlled by the people of the country

  24. TYPES OF ECONOMIC SYSTEMS • Traditional economy • Goods and services are produced the way it has always been done. • The traditional economy is used in countries that are less developed • Mixed economies • Combines elements of the command and market economies

  25. Checkpoint  • What are the main differences among the three economic systems? • The main differences among the economic systems are found in the ways in which the three economic questions are answered.

  26. THE U.S. ECONOMIC SYSTEM • Capitalism • Based on four principles • Private property • Freedom of choice • Profit • Competition

  27. Checkpoint  • Name the four principles of the U.S. economic system. • Private property • Freedom of choice • Profit • Competition

  28. 1-4 Supply and Demand Goal 1 Describe supply and demand orally and with graphs. Goal 2 Discuss how supply and demand affect prices of products and services.

  29. KEY TERMS • consumer • producers • demand • supply • market price

  30. PARTICIPATING IN A MARKET ECONOMY • Consumers set demand • Producers establish supply • Between the two, a market price is set • A graphic views

  31. DEMAND

  32. SUPPLY

  33. Checkpoint  • How does the price of a product affect demand and supply? • As prices decrease, the number of consumers willing and able to purchase the product (demand) will increase. • As prices increase, businesses will be willing to supply larger quantities of the product.

  34. DETERMINING PRICE • Factors influencing demand • Need, available substitutes • Factors influencing supply • Competition • Natural Disaster • Determining market price • The point where supply and demand are equal

  35. MARKET PRICE

  36. Checkpoint  • How is the market price for a product determined? • Supply, demand, and competition determine the market price for a product or service. • The market price is the point at which supply and demand are equal.

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