Presentation on theme: "1 Economic Decisions and Systems 1-1 Satisfying Needs and Wants"— Presentation transcript:
1 1 Economic Decisions and Systems 1-1 Satisfying Needs and Wants C H A P T E R1Economic Decisions and Systems1-1 Satisfying Needs and Wants1-2 Economic Choices1-3 Economic Systems1-4 Supply and Demand
2 1-1 Satisfying Needs and Wants Goal 1 Explain the difference between needs and wants.Goal 2 Distinguish between goods and services.Goal 3 Describe the types of economic resources.
4 NEEDS AND WANTS Needs are essential to your life Wants add to the quality of lifeNeeds and wants are unlimitedExamples?Different for you and your parents?
5 Checkpoint What is the difference between a need and a want? Needs are those things required to live, such as food, clothing, and shelter.Wants are things that add comfort and pleasure to our lives such as television, music CDs, and movies.
6 GOODS AND SERVICES What is the difference? Goods are manufactured and soldServices are providedYou purchase and use services to satisfy your wants and needs, but unlike goods, businesses must provide services to you at the time you want to consume them.
7 The U.S. economy The largest producer Also the largest consumer More than the next two combinedChina and JapanAlso the largest consumerLargest consumer of oilMore than the next four combinedWhy did this happen?Shift from agricultural to an industrial economy
8 Checkpoint How do people satisfy their wants and needs? People satisfy their wants and needs by purchasing and consuming goods and services.
9 ECONOMIC RESOURCES Natural resources Human resources Capital resources Raw materials provided by mother natureHuman resourcesPeople who produce goods and servicesCapital resourcesEquipment and money used in productionResources are limited
10 Checkpoint What are the three types of economic resources? Give an example of each type.Natural: water, land, trees, animals, and minerals.Human: labor (people who run farms and factories, transport goods, provide services, or manage businesses).Capital: money, land, buildings, tools, and equipment.
11 1-2 Economic Choices Goal 1 Understand the basic economic problem. Goal 2 Explain the steps in the decision-making process.
13 THE BASIC ECONOMIC PROBLEM What is the Basic Economic Question?Unlimited wants and needs VS limited economic resourcesScarcityNot having enough resources to satisfy every need
14 Economic Decision Making The process of choosing which needs and wants will be satisfiedChoicesScarcity forces you to make decisions among the alternatives
15 Trade-offs and opportunity costs When you give up something to have something elseOpportunity CostThe value of the next-best alternative that you were not able to chooseExamples?
16 Checkpoint What is opportunity cost? Opportunity cost is the value of the next best alternative that you don’t choose.It is what you are willing to give up in order to have your first choice.
17 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.
18 Checkpoint What are the six steps in the decision-making process? Define the problem.Identify the choices.Evaluate advantages and disadvantages of each alternative.Choose one.Act on your choice.Review your decision.
19 1-3 Economic Systems Goal 1 Identify the three economic questions. Goal 2 Differentiate among the main types of economic systems.Goal 3 Describe the economic system of the United States.
20 KEY TERMS economic system command economy market economy traditional economymixed economycapitalism
21 THE THREE ECONOMIC QUESTIONS What to produce?How to produce?What needs and wants to satisfy?How are they different in different countries?
22 Checkpoint What are the three economic questions? What goods and services will be produced?How will the goods and services be produced?What needs and wants will be satisfied with the goods and services?
23 TYPES OF ECONOMIC SYSTEMS Command economyResources are owned and controlled by the government of the countryMarket economyResources are owned and controlled by the people of the country
24 TYPES OF ECONOMIC SYSTEMS Traditional economyGoods and services are produced the way it has always been done.The traditional economy is used in countries that are less developedMixed economiesCombines elements of the command and market economies
25 Checkpoint What are the main differences among the three economic systems?The main differences among the economic systems are found in the ways in which the three economic questions are answered.
26 THE U.S. ECONOMIC SYSTEM Capitalism Based on four principles Private propertyFreedom of choiceProfitCompetition
27 Checkpoint Name the four principles of the U.S. economic system. Private propertyFreedom of choiceProfitCompetition
28 1-4 Supply and DemandGoal 1 Describe supply and demand orally and with graphs.Goal 2 Discuss how supply and demand affect prices of products and services.
33 Checkpoint How does the price of a product affect demand and supply? As prices decrease, the number of consumers willing and able to purchase the product (demand) will increase.As prices increase, businesses will be willing to supply larger quantities of the product.
34 DETERMINING PRICE Factors influencing demand Need, available substitutesFactors influencing supplyCompetitionNatural DisasterDetermining market priceThe point where supply and demand are equal
36 Checkpoint How is the market price for a product determined? Supply, demand, and competition determine the market price for a product or service.The market price is the point at which supply and demand are equal.