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 Essential Questions  What is the difference between a need and a want?  What is the difference between a good and service?  How do goods and services affect the U.S. economy?  What are the 3 main economic resources?

3. Needs vs Wants  Needs = things that are required in life. Clothes, food, shelter  Wants = things are not required to survive but that add comfort and pleasure to life. Cell phones, Ipods  Both are unlimited

4. Goods vs. Services  Goods = tangible - things you can see and touch. Cell phones, clothes, cars  Services = activities that are consumed at the same time they are produced. Intangible - No physical characteristics. Hair cuts, inspection services  Both consumed by businesses and individuals.  U.S. is largest producer and consumer of goods and services in the world.

5. How Goods & services affect the U.S. economy Goods and services are purchased by consumers and businesses Businesses supply the goods & services to meet the demands of consumers and businesses Provide us with job & income opportunities Americans consume more than any other country with twice as many shopping malls as high schools We produce more garbage a year then other countries Often incur debt to buy these goods & services 5Chapter 1

6. Economic Resources  AKA factors of production = various ways goods and services are produced. LIMITED SUPPLY  Natural resources = raw materials supplied by nature. Vegetables for vegetable soup  Human Resources = people who produce the goods and services. Entrepreneurs, factory workers  Capital Resources = products and money used in the production of goods and services. Equipment used to produce goods, money needed to produce goods.  All economic resources are limited

7. Discuss Essential Questions  What is the difference between a need and a want?  What is the difference between a good and service?  How do goods and services affect the U.S. economy?  What are the 3 main economic resources?

8. 1.2 Economic Choices Essential Questions  What is the basic economic problem?  Describe the 6 steps of the decision making process?

9. The Basic Economic Problem  The mismatch of unlimited wants and needs compared to the limited economic resources.  Scarcity = not having enough resources to satisfy every need. For example, you may want to go to the movies but you may not have the money needed

10. Choices, Trade-offs and Opportunity Costs  Economic Decision Making = process of choosing which wants will be satisfied. You may have several wants but you need to make choices after reviewing your various options.  Trade-off = giving up one thing to have something else. You could not go to the movies because you went shopping and spent all of your money on new clothes.  Opportunity Costs = the value of the next-best alternative that you did not choose. Ex. College vs getting a job right after school.

11. The Decision Making Process  Define the problem  Identify the choices to solve the problem  Evaluate the advantages and disadvantages  Choose the best option based on your evaluation  Act on your choice – put the solution in action  Review your decision

12. Discuss Essential Questions  What is the basic economic problem?  What are the 6 steps of the decision making process?

13. 1.3 Economic Systems Essential Questions  What are the three economic questions?  What are the four main types of economic systems?  Describe the U.S. economic system

14. The Three Economic Questions  What goods and services will be produced? Deciding what resources will be used in production has a lot to do with location.  Ex. laptop  How will the goods and services be produced? Skilled workers vs machines  Ex. Low skilled workers in China  What needs and wants to satisfy?  Ex. The want to have mobile access to internet, Microsoft office, etc

15. Types of Economic Systems  Command Economy resources owned and controlled by the government  Ex. China  Market Economy resources owned and controlled by the people of the country  Ex. U.S.  Traditional Economy goods and services produced same way they always have been. This occurs in less complex economies.  Ex. South Africa still build own homes, grown own food, hunt & gather  Mixed Economy combines elements of the command and market economy  Ex. China becoming mix of command and market cutting back on many restrictions

16. The U.S. Economic System  Capitalism = private ownership of resources by individuals not government. This is how the U.S. economic system works.  We all have freedom to decide what to produce and what to consume which is referred to as a free or private enterprise  Freedom to own, use, or dispose of ones own private property.  Freedom to make choices and accept consequences  Freedom to make a profit, the money left from sales after all expenses are paid  Freedom to compete with other businesses

17. Discuss Essential Questions  What are the three economic questions?  What are the four main types of economic systems?  Describe the U.S. economic system

18. 1.4 Supply and Demand Essential Questions  What is the difference between supply and demand? How can we show this on a graph  How do supply and demand affect prices of products and services

19. Participating in a Market Economy  Consumers = people who buy goods and services. Set demand  Producers = individuals or organizations that make products and services available for sale. Produce supply based on demand.

20. Graphing Supply and Demand  Demand Curve = shows how the price of a product affects the quantity demanded. As the price decreases the demand will increase.  Supply Curve = shows how the price of a product affects how much a producer will supply. As price increases producers will increase supply.

21. DEMAND AND SUPPLY

22. Determining Price  Evaluate factors influencing demand. If many people want a product the price will go up. Example – Wildwood hotels are more expensive during the summer  Evaluate factors influencing supply. Weather, competitors, natural disasters. Example – If all of your competitors offer the same product you will have to lower your price to move your goods faster then them  Market Price is determined by supply, demand, and competition. The point where supply and demand are equal.

23. Market Price

24. Discuss Essential Questions  What is the difference between supply and demand? How can we show this on a graph  How do supply and demand affect prices of products and services