APK: WHO IS MORE IMPORTANT? Who is more important producers or consumers? Answer the question with details to support your answer

Why individuals and groups make economic choices? Goal 7.03

Economic Activity Market -A location that allows buyers and sellers to exchange goods and services Economic Activity The Decision Makers Consumers- People who purchase products Producers- Group of people who create products Government- Group who controls the market Foreign Sector- Other countries we trade with

The Circular Flow of Economics Trade Foreign Sector Profit is made Products are bought Product Market Buys products House Market Government Businesses Market Offers Jobs/Revenue Provides for the market Income is earned Factor Market

Productivity and Economic Growth * When a nation’s total output increases over time the circular flow gets larger The more productive you are the more you profit We earn more when we do the things we can do well Productivity How efficient resources are being used Specialization Concentrating on a specific skill When companies invest in their workers their productivity tends to increase Division of Labor Breaking the total task into smaller jobs Human Capital The sum of all the skills, ability, and motivation of the people Makes use of different skills

Making Economic Decisions Trade-Offs Exchanging one thing for the use of another. Example When you buy a product, you exchange money for the right to own that product rather than something else you could buy for the same price.

Next BEST alternative that you had to give up for the choice you made Opportunity Cost Definition < What you cannot buy or do when you choose to do or buy one thing rather than another. Next BEST alternative that you had to give up for the choice you made Example - Cleaning the house includes not only the price of cleaning products but also the time you spent cleaning instead of going out

Marginal Benefit We usually do something because we expect to achieve some benefit. Marginal benefit is the additional benefit associated with an action. 8

Car Payment Rent/Mortgage Fixed Cost Expenses that are the same Variable Cost Expenses that change with the number of products produced. Light Bill Water Bill

(complete cost of producing a product) Add them both up… Fixed Cost + Variable Cost = TOTAL COST (complete cost of producing a product)