Economics -Economics -the system that society uses to produce and distribute goods and services -Why study economics??? -Why does the government pay so much attention to the economy???

Wants and Needs -Wants are the things which people would like to have -Needs are the things which people need to survive -Goods -things that can be made or manufactured -Capital goods are the things used to manufacture other goods -consumer goods are goods meant to be sold to consumers for use -Services -work that is done for someone for a certain price

Limited Availability -Goods and Services are produced using resources Natural Resources or Human Resources -Scarcity -the economic problems of limited goods and the unlimited wants of society in general -Scarcity limits the availability of goods and services that people desire or need. -This scarcity gives goods and services VALUE

Putting a Price on Things -Price or VALUE is based on two basic factors Supply and Demand -Supply -the amount of a good or service that is available for consumers to buy -Demand -the amount of a good or service that consumers are willing to buy

Determining Price -Price is determined by comparing the amount of demand to the amount of supply and finding an amount where they are equal -Market or Equilibrium Price -this is the point at which supply and demand meet and price is determined

Effects of Price -Shortages -when demand is greater than supply -What happens to price? -Surplus -When supply is greater than demand