1. Economics:
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2. Economics Economics: the study of how people choose to use resources.
Many economic choices involve goods and services
Goods- items that people buy
Books, car , computer
Services- work done for other people for money
Doctors, lawyers, teachers and chefs provide services
Goods and Services BrainPop Video
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3. Everyone has basic needs and wants.
Need is something necessary
Water, food, clothing and shelter.
Want is an item that people do not have to have, but would like to have
TV, cell phone
Scarcity – occurs when people want or need more of something than there is.
Wants and Needs BrainPop Video

4. To obtain things that people want, the people and government make choices.
Ex. If a person earns $4,000 every month
They spend $3,000 on basic needs like food, water, rent, healthcare and transportation.
How should they spend the other $1,000?
They might choose to save the money to buy a house one day or go on a vacation.
However, because the money is limited, the person is not able to both things.

5. In economics, the choice of doing one thing rather than another is called a trade-off
If the person chooses the vacation, there is a cost in that choice.
He will not be able to save for a house.
This is called an opportunity cost.

7. Supply is the ability and willingness of sellers to make products and services available for sale.
Demand is the amount of goods and services that buyers are willing to buy.

8. According to the law of supply, when the price of an item rises, so does the supply.
The increase in the price acts as an incentive to the supplier to produce more of that item.
An incentive is something that encourages a person to take a certain action.

9. Ex. You are small farmer in colonial America.
This season, you have planted ten acres of wheat and ten acres of oats.
The prices of both are about the same.
After the year’s harvest has been sold, though the market prices change.
People are willing to pay nearly twice as much for wheat as they did last year.
They are not willing to pay more for oats.
The increased demand for wheat is an incentive for you to plant more wheat than oats the next year.

10. Specialization
Specialization is the choice to produce certain items as opposed to others, or even one part of an item
improve people’s standard of living
Increase productivity
Productivity- the amount of goods and services that a person or business can produce in a given time span.

11. In colonial times….
Large landowners in the south chose to specialize in growing profitable crops like tobacco and cotton.
Their land was suited to specialization.
In New York City, certain producers specialized in shipbuilding.
The city was an important center for trade, so ships were in demand.
New England also specialized in shipbuilding because there was a lot of timber.

12. Trade and Productivity
Trade: the exchange of one item for another.
The most basic reason for trade is that people cannot get all the things they want or need by themselves.
Before currency was used, people used a barter system for trade.
In a barter system, items of equal value are exchanged back and forth.

13. For this to work, both traders had to be willing to make the exchange and feel that they were better off because of it. This is called voluntary exchange.
Before bank notes and metal coins were invented, people used all sorts of things for money: for example, beads, furs, guns, feathers, animal teeth, tea leaves, shells, salt and tobacco. In colonial times, Europeans traded with Native Americans this way.
trade promises economic activity
makes goods and services that are unevenly distributed in a region or country more available to buyers and sellers.

14. After the Revolutionary War, trade between the states did not work well at first.
The Articles of Confederation did not give Congress strong powers to regulate interstate trade.
Later, under the Constitution, the nation had a stronger central government, and trade benefited.

15. Technology also benefited productivity.
Technology: the use of science and inventions to improve everyday life.
Early 1900’s Henry Ford began to use the assembly line to produce cars.
Assembly line: a factory system in which a worker makes only part of a product.
On Ford’s assembly line, a car would be produced in 90 minutes instead of 12 hours. Over all, productivity increased.

16. Beginning in the 1980’s, Computers have had a great effect on productivity in many industries.
Buyers and sellers can also now deal with goods over the internet.
Advances in transporting goods have also been made around the world.
Goods are now being bought and sold in global markets