1. Economics

2. Economic Basics Vocabulary: Economics: Study of how people meet their wants and needs Scarcity: Having a limited quantity of resources to meet unlimited wants Opportunity Cost: The cost of what you have to give up Demand: The desire for a certain good or service Supply: The amount of a good or service that is available for use Producers: People or businesses that make and sell products Consumers: People or businesses that buy, or consume, products. Incentive: A factor that encourages people to act in a certain way

3. Economic Basics 3 questions in economics: 1. what goods and services should be produced? 2. How should goods and services be produced? 3. Who uses or consumers those goods and services?

4. Economic basics Resources people use to make goods and services are called factors of production Three main factors: land, labor, capital.

5. Economic basics People have limited money and time, they have to choose what they want most; making a choice involves opportunity cost Demand and Supply are connected to price. Producers: try to win consumers’ business by offering better products for lower prices than other producers. Marginal cost is the cost of making one more unit of the product. Businesses: make products because of economic incentives.

6. Economic Process Vocabulary: Market: An organized way for producers and consumers to trade goods and services Profit: the money a company has left after subtracting the costs of doing business Revenue: The money earned by selling goods and services Specialization: the act of concentrating on a limited number of goods or activities. Competition: The struggle among producers and consumers’ money. Inflation: In a growing economy, prices may increase over time. Recession: A decline in economic growth for six or more months in a row.

7. Economic Process Producers and consumers exchange goods in a market Businesses want to make a profit: To do this businesses try to reduce expenses and increase revenue The price of resources affects revenue and profit. Specialization allows people and companies to use resources more efficiently and to increase production and consumption. Competition: If one company raises the price of its products, another company may sell similar goods for a lower price to win more business. Healthy economy sells more goods and services.

8. Economic Systems Traditional Economy: An economy in which people make economic decisions based on their customs and habits. Usually satisfy their needs and wants through hunting or farming Usually do no want to change their basic way of life

9. Economic Systems Market Economies: An economy in which individual consumers and producers make economic decisions. This type of economy is called capitalism, or a free market Encourage entrepreneurs to establish new businesses by giving them economic freedom

10. Economic Systems Command economy: An economy in which the central government makes all economic decisions. Called a centrally planned economy Individual consumers and producers do not make basic economic decisions

11. Economic Systems Mixed economy: is an economy that combines elements of traditional, market, and command economic systems

12. Trade Vocabulary: Trade: Is the exchange of goods and services in a market Exports: are goods and services produced within a country and sold outside the country’s borders Imports: are goods and services sold in a country that are produced in other countries Tariff: A tax on imports or exports Trade Barrier: a government policy or restriction that limits international trade Free Trade: The removal of trade barriers

13. Trade To get the products we need and want we engage in trade Geographic location can give a country or region advantages in trade All the buying and selling that takes place within a country is known as domestic trade Domestic producers and consumers can also engage in international trade If imported goods are cheaper than domestic goods, consumers will usually buy more of them.