1. E CONOMICS

2. W HAT DOES ECONOMICS MEAN TO ME ? Economics is the study of how people use their limited resources to satisfy their unlimited wants. In other words, economics studies how people get what they want by using what they have.

3. D EFINE L IMITED R ESOURCES AND UNLIMITED WANTS Limited Resources Unlimited Wants There are only a limited number of goods and services available at any one time. What are your limited resources? How do you use them? People always want more! Do all people want the same thing? How do you use your resources to get what you want? Do we ever stop wanting?

4. W HAT IS THE DIFFERENCE BETWEEN NEEDS AND WANTS ? Needs Wants

5. S CARCITY REFERS TO THE FACT THAT PEOPLE DO NOT HAVE ENOUGH RESOURCES TO SATISFY THEIR WANTS. People’s wants are always greater than the resources available! What two conditions create scarcity?

6. S CARCITY AND C HOICE

7. O PPORTUNITY C OSTS OF AN ECONOMIC DECISION REFER TO THE NEXT BEST CHOICE THAT WAS GIVEN UP BY THAT DECISION. Example: If Jane has $1.00 and she has to choose between a pop and a bouncy ball and she chooses the pop than her opportunity cost is…….

8. D RAW YOUR OWN PICTURE OF S CARCITY Scarcity is

9. H OW ARE S CARCE R ESOURCES A LLOCATED ? Cut the definitions into strips on and match them to the correct definition. Command Price “First-come, first-served” Sharing Equally Rationing Lottery

10. A LLOCATION M ETHODS Check your work, then paste. Command- Government leaders decide who should get which resources. Price - Producers state a price they are willing to sell their resources for and consumers decide whether or not to buy the resource at that price. “First-come, first-served” - The seller offers the resource to customers in the order in which they appear, until the supply is used up. Sharing Equally - Members of a group share their resources equally. Rationing - During a shortage, a supplier or the government controls the amount of resources that can be used. Each user is allowed the same limited amount. Lottery - People interested in the resource are assigned a number. Some numbers are selected by chance. Only those people selected may get or purchase the resource. Which method is the best? Does it depend on the situation?

11. D AILY E XAMPLES OF ALLOCATION METHODS Command- How parents give out allowance to their kids Price-How most businesses and stores operate “First-come, first-served” –How people usually get baseball or concert tickets Sharing equally- How we are taught to share and divide up resources equally among our friends and family Rationing- How your parents allow you to eat your Halloween candy, usually Lottery- How a raffle works

12. E VERY S OCIETY HAS 3 BASIC ECONOMIC QUESTIONS IT MUST ANSWER What should be produced? How should it be produced? Who should get what is produced? Draw these three boxes in your flip book. Which of these economic questions is answered by methods of allocation? Answer this question in your flip book.

13. G OODS AND S ERVICES GoodsServices Draw at least 2 examples of each.

14. C USTOMER SERVICE Customer Service is an organization’s ability to supply their customers wants and needs. Write definition under pictures of goods and services.

15. R ESOURCES Money is not a resource!

16. M ONEY IS THE PRODUCT OF RESOURCES NOT A RESOURCE ! Productive resources are also known at the “factors of production” and they are the ingredients that go into making goods and services. Productive resources include: Human Resources Natural Resources Entrepreneurship and Capital Goods

17. P RODUCTION Production -means the making of goods Resource-a usable supply of energy or products In economics, resources are the materials that go into making goods and services.

18. P RODUCTIVE R ESOURCES : Capital Goods -Machines, tools, computers, buildings and trucks are all capital goods when they are being used to produce other goods Entrepreneurship- The different ingredients that go into making something must be organized

19. P ROFIT AND LOSS Profit-The positive gain from an investment or business operation after subtracting for all expenses Loss- The negative loss from an investment or business operation after adding all expenses Write these definitions into your study guide.

20. S TRATEGIES FOR ORGANIZING PRODUCTION There are many different ways, or strategies for organizing productive resources to make the production of goods and services more efficient. What does production mean?

21. S TRATEGIES FOR ORGANIZING PRODUCTION Technology -The use of knowledge, skills and tools for making things. Technology applies human knowledge to production. Why is this important? A car manufacturer can produce many more cars and do it more efficiently by using the latest technology.

22. S TRATEGIES FOR ORGANIZING PRODUCTION Specialization -Producers only make a few goods or services and trade with others to satisfy wants. Specialization allows a producer to be more efficient. How?

23. S PECIALIZATION WHY IS IT IMPORTANT ? 1. Specialization allows a producer to be more efficient. 2. Job specialization allows people to make use of their best talents. 3. Some specialization may be based on natural resources. Example: Northern Ohio specializes in fishing because it on Lake Erie.

24. S TRATEGIES FOR ORGANIZING PRODUCTION The division of labor breaks down jobs into a number of separate tasks, each performed by a different group or individual. What is labor? Labor is the work people do to make goods and services.

25. D IVISION OF LABOR How is the division of labor important to producing goods and services? The division of labor takes advantage of workers’ differing skills and talents. Examples: Assembly line

26. M ARKET E CONOMY The United States is a market economy. In a market economy, producers and consumers decide how resources will be used. A market economy is a place where people exchange goods and services freely. In a market economy, producers and consumers together determine what is made and who gets it.

27. T HE EFFECTS OF COMPETITION A producer is a person or business that supplies goods and services. Producers sell their goods and services in order to make a profit. Consumers are the people and businesses that buy and use goods and services. Can you be a consumer and a producer?

28. C OMPETITION Competition among producers occurs when each producer wants to make sure that it can sell all of its products to consumers. Producers try to: 1.Sell their supply for the highest price they can get 2. Out-perform others by making the best product

29. H OW DOES COMPETITION AFFECT CONSUMERS ? Producers want to sell all of their products to consumers. In order to compete to sell products, producers will: 1. Lower their prices 2. Improve the quality of products Competition = low price & high quality

30. I F PRODUCERS COMPETE, WHY DO PRICES GO UP ? Sometimes there are so many consumers who wish to purchase a product that there is not enough to go around. This means that the demand for the product is high. Since consumers are willing to pay more for the product, producers know that they can increase the price. If demand is low, producers may have to lower their price to attract customers.

31. S UPPLY AND D EMAND The relationship between the supply of a product and the demand for a product helps to set the price in a competitive market. High demand and low supply will increase the price of a product. Low demand and high supply will lower the price of a product.

32. S PECIALIZATION Specialization occurs when people produce fewer goods and services than they use. Advantages: 1. Goods and services become cheaper to produce. By producing one good or service, a producer becomes more skilled and more efficient at making it. 2. Producers can make use of local advantages. Regions specialize because of their natural resource advantages.

33. R EGIONAL SPECIALIZATION Region= any geographic area sharing common characteristics Regions rarely produce everything they need. Instead, regions depend on one another for goods and services. Regions are better off specializing- putting their money, resources and labor into making things they are most efficient at producing.

34. S PECIALIZATION Imports- goods from foreign countries brought into a country for sale Exports- goods and services sold from one country to other countries

35. I NTERDEPENDENCE Specialization leads to increased trade among regions and nations. Because of specialization and trade, some regions become interdependent. They depend on each other for goods and services. Regional specialization promotes trade.

36. T HAT ’ S A LL ………. FOR NOW