1. Economic Decisions and Systems
CHAPTER 1
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Economic Decisions and Systems
1-1 Satisfying Needs and Wants
1-2 Economic Choices
1-3 Economic Systems
1-4 Supply and Demand
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2. NEEDS AND WANTS Needs are essential
Wants add to the quality of life – add comfort and pleasure to your life.
Needs and wants are unlimited - they never end!
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3. GOODS AND SERVICES Goods and services for businesses and consumers
Goods – things you can see & touch
Services – activities consumed at the same time they are produced.
The U.S. economy – largest producer of goods and services in world.
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4. ECONOMIC RESOURCES – are the means through which goods & services are produced.
Natural resources – raw materials supplied by nature
Human resources – people producing goods and services (example- employees)
Capital resources – the products and money used in the production of goods and services (example – pick up truck, factory, lumber)
Resources are limited
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5. THE BASIC ECONOMIC PROBLEM – the mismatch of unlimited wants and needs and limited economic resources.
Scarcity – means not having enough resources to satisfy every need.
Economic decision-making - is the process of choosing which wants, among several options, will be satisfied.
Tradeoffs – give up something to have something else.
Opportunity costs – the value of the next-best alternative that you did not choose.
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6. 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.
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7. THE THREE ECONOMIC QUESTIONS
What to produce?
How to produce?
What needs and wants to satisfy?
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8. TYPES OF ECONOMIC SYSTEMS – nation’s plan for answering the three economic questions.
Command economy – resources are owned and controlled by the government.
Market economy – the resources are owned and controlled by the people of the country.
Traditional economy – goods and services are produced the way it has always been done. Used in less developed countries and not yet participating in the global economy.
Mixed economies – combines elements of the command and market economies.
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9. THE U.S. ECONOMIC SYSTEM – another name in United States is capitalism.
Private property
Freedom of choice
Profit
Competition
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10. LESSON 1-4 Supply and Demand
Goals
Describe supply and demand orally and with graphs.
Discuss how supply and demand affect prices of products and services.
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11. PARTICIPATING IN A MARKET ECONOMY
Consumers set demand
Producers establish supply
A graphic view
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12. DEMAND AND SUPPLY
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13. DETERMINING PRICE Factors influencing demand
Factors influencing supply
Determining market price
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14. MARKET PRICE
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