Chapter 1Economic Decisions and

Systems

Chapter 1

THE BIG IDEA…Businesses make money by offering goods and services to satisfy the wants and needs of consumers and other businesses. In this way, wants and needs drive the U.S. Economy.

Chapter 1 VOCABULARY

GoodsPhysical products.

ServicesTasks business preform for other people.

Chapter 1

Good or service?

Chapter 1

Good or service?

Chapter 1

Good or service?

Chapter 1

Good or service?

Chapter 1

Good or service?

Chapter 1 VOCABULARY

WantsThings that you do not have, but would like to have.

NeedsThings that you must have in order to survive.

Chapter 1

Need or want?

Chapter 1

Need or want?

Chapter 1

Need or want?

Chapter 1

Need or want?

Chapter 1

Need or want?

Chapter 1 VOCABULARY

Needs and Wants…determine what products and services businesses provide.

Chapter 1 VOCABULARY

Economic Resources• Items that people can use to make or obtain

what they need or want.• The means through which goods and services

are produced.• Also called Factors of Production

Chapter 1 VOCABULARY

Resources

Chapter 1 VOCABULARY

Natural ResourcesRaw materials supplied by nature.

Chapter 1 VOCABULARY

Human ResourcesPeople producing goods and services.

Chapter 1 VOCABULARY

Capital ResourcesThe products and money used in the production of goods and services.

Chapter 1 VOCABULARY

ResourcesNo one has enough resources to satisfy all their needs and wants.

Resources are limited.

Chapter 1 VOCABULARY

ScarcityNot having enough resources to satisfy every need.

Example:Your allowance is $20 a week. Is this enough money to satisfy all your needs and/or wants?

Chapter 1 VOCABULARY

Economic decision-makingThe process of choosing which wants will be satisfied.

TradeoffWhen you give up something to have something else.

Chapter 1 VOCABULARY

Opportunity Cost• The value of the next-best alternative that you

did not choose• What you give up when you make a decision

Decision Opportunity CostDo your homework Watch TVGo on a vacation Save moneyStay home See your friends

Chapter 1Need advice…You have a decision to make. Your best friend called and told you they have tickets to a concert you’ve been wanting to go to TONIGHT. However, you’ve already promised your family that you would go to dinner with them for your Dad’s birthday. It’s impossible to do both. You really want to go to the concert but don’t want to cause hard feelings with your dad or family. How do you go about making this decision?

Chapter 1Decision 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.

• Command Economy – Resources are owned and controlled by the government.

• Market Economy – Resources are owned and controlled by the people of the country.

• Traditional Economy – Goods and services are produced the way it has always been done. (used in less developed countries)

• Mixed Economy – combines elements of the command and market economies.

Types Economic Systems

Chapter 1 VOCABULARY

Competition• The contest between businesses to win

customers.• The rivalry among businesses to sell their goods

and services.

Chapter 1 Section 1.2

Competition

Chapter 1 Section 1.2

Competition happens when…businesses continually try to improve their products and services and do better than one another.

Chapter 1 VOCABULARY

ConsumerA person who buys and uses goods or services.

Chapter 1 VOCABULARY

ProducerIndividuals and organizations that determine what products and services will be available for sale.

• Supply – the amount of goods and services that producers will provide at various prices.

Supply

If consumers are willing to pay more

for a good or service

Then sellers are willing to supply more of that

good or service

• Demand – is the amount or quantity of goods and services that consumers are willing to buy at various prices.

Demand

Consumers are willing to consume more of a good or service at a

lower price

Market Price

• Market Price – is the point at which the quantity demanded and the quantity supplied meet.

The Lemonade Stand

http://www.primarygames.com/socstudies/lemonade/start.htm

How well can you balance supply and demand?