1. Chapter 2 By Mr. Soule

2.  With limited resources a nation has an influence on how there resources are used. - Scarcity There are 3 economic questions -What goods and services are to be produced? -How should goods and services be produced? -For whom should the goods and services be produced?

3.  Nations differ in their wants just as individuals do.  Nations must learn how to best use its resources.  Nation concentrates to much a military resources may not have enough for consumer goods  If all resources are for consumer goods it may not be able to protect its people from outside forces.

4. North Korea

6.  Economic resources combine in different ways to produce the same goods and services. Each nation decides which combination of resources will best suit its circumstances.  One country may have a lot of people but limited capital resources  Another may have more capital resources and need less labor to complete the project. Example: constructing a new road

7.  A nation must consider who’s needs and wants are must critical.  Should they be distributed equally or should someone be able to buy whatever you can pay for?  In the US with our plentiful supply of goods and services. What we buy is largely determined by the amount we are willing to spend.

8.  Market – where buyers and sellers meet to exchange goods and services. This does not have to mean a face-to-face meeting.  Market economy – an economy where all resources are allocated by private individuals and groups.  Mixed economy – an economy where some resources are allocated by the government, and other resources are allocated by private individuals and groups.

9.  A Market economy is an economy where all resources are allocated by the forces of Supply and Demand, basically by buyers and sellers, with a price attached. All resources are privately owned, and people act in their own self-interest. In a free-market economy, there is NO government involvement in the allocation of resources.

10.  Custom- based Economy- Goods are produces the way they have always been produced. -Can you think of some custom based business or economies? Think history  Change and growth occur slowly

11.  A planned economy - ALL resources are allocated by the government. The government owns everything and controls prices and incomes.  A mixed economy is somewhere in between free-market and planned economies. The government owns and allocates some resources, and the free market (buyers and sellers) own and allocate others. Mostly found in Democratic societies.

12.  The public sector includes organizations owned and run by the government, such as hospitals and schools, which are not there to make a profit. The government runs these organizations in order to make sure these vital services are provided. These services provide benefits not only to those using them, but also to people who are not directly involved ( positive externality ).

13.  The private sector includes organizations owned and run by private individuals or groups. Their main objective is to make the largest possible profit. They will also have other objectives, such as to increase in size, to have a greater market share, or to provide a high-quality product or service.

14.  The US economy is a mixed economy – this means that some resources are allocated by the government and some are allocated by buyers and sellers. This means we have some firms owned and run by the government, while other firms are owned and run by private individuals.  Capitalism is another name for the US economy. The resources are usually privately owned by individuals rather than the government.

15.  List three businesses/organizations owned by the government.  List three businesses/organizations owned by private individuals or groups of people.

16.  How is it calculated?  Profit Margin – People are willing to invest money in a business and develop new products to satisfy customers’ wants.  Is competition a good thing?  Examples of competing business…  Who benefits?

17.  Page 27  Answer questions 20 to 32. Write out the definition and what word represents that definition.