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Chapter 6

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Objectives

Explain why individuals and nations must make economic choices.

Give an example of an opportunity cost.

Describe what an economic system does.

List the three major economic inputs and give an example of each.

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Objectives

Explain why infrastructure is important to an economic system.

Describe the benefits of advanced technology.

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Marketing Terms

scarcity opportunity cost economic system economic inputs economic outputs land natural resources labor

entrepreneurship capital capital goods final product infrastructure technology advanced technol

ogy

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Scarcity

Scarcity not enough

resources– to meet needs

affects individuals and nations

1. Give examples of scarce resources.

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Scarcity

Some resources water trees oil

A resource can be used only once oil used to fuel a car

cannot be used to heat a home

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Scarcity Money is also a scarce resource

the money you spend on one thing– cannot be spent on something else

example: the money you spend on food and snacks– cannot be spent on new clothes

The opportunity cost of a decision is the value of the item you did not choose

(for example: the opportunity cost of buying a one dollar candy could be a one dollar pen that you did not buy based on your decision)

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Scarcity

The opportunity cost of the decision to

buy dinner at a restaurant– is the cost of

the clothes you did not buy

#2 Give an example of Opportunity Cost.

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An Economic System

A system accomplishes a task with these three parts inputs a mechanism outputs

The purpose of most systems is to produce the outputs

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An Economic System

An economic system is developed by a nation

– to turn its resources into products

An economic system consists of economic inputs a mechanism economic outputs

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An Economic System

Economic inputs resources used to make products

Mechanism the process of production

Economic outputs goods, services, and ideas

3. Name some economic outputs of theUnited States economy.

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Economic Inputs

Economic inputs are the resources used to make products

Three categories of economic inputs land labor capital

#4 Think of a product you use. What resources

were used to make this product?

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Economic Inputs

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Land

Land includes all of a

nation’s natural resources

Examples soil, water,

minerals, plants, animals, and climate

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Land

Natural resources are scarce unequally distributed

among nations

#5 What natural resources are scarce in the United States?

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Labor

Labor the people who

make products

Labor includes workers’ levels

of education, skills, and productivity

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Labor

Entrepreneurship is the ability to start new businesses Risk Takers

An economy with many successful entrepreneurs is usually a successful

economy

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Capital

Capital manufactured products

– used to make other products

Capital goods is another term for capital because capital consists of

– goods used to make other goods

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Capital

A final product is a good that is purchased by a consumer

– examples: cars, clothing, shoes, refrigerators, and books

Capital goods are used to make final products

#6 Name some final products that you buy.

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#7 What final products might be made using

these examples of capital goods?

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Capital

The term capital is also used as the short form for the term financial capital

Financial capital is the money used to buy capital goods

So the term capital can refer to capital goods (machinery, etc.) or money used to buy capital goods

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Infrastructure

Infrastructure necessary for

a modern economy

includes transportation systems and utilities

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Infrastructure

Transportation systems highways, bridges, railroads, public

transportation, seaports, and airports

Utilities sanitation systems, electric power plants,

water systems, and telephone service

#8 Describe examples of infrastructureyou have used today.

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Technology

Technology use of tools

– to improve human life

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Technology

Early technology simple machines machines powered by people or animals

Advanced technology industrial technology

– steam and combustion digital technology

– electricity used to control data

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Review

What are the three parts of a system? Name the three categories of economic

inputs. What is the difference between capital

goods and final products? Define infrastructure and give examples. How does technology affect human

productivity?

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Glossary

advanced technology. Industrial and digital technologies.

capital. Any manufactured product used to make another product; includes machinery, buildings, vehicles, and computers; also can refer to the money used to buy capital.

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Glossary

capital goods. Manufactured products used to make final products.

economic inputs. Resources used to make products.

economic outputs. Products (goods, services, and ideas) produced by an economic system.

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Glossary

economic system. The system that a nation has developed to turn its resources into products that satisfy needs.

entrepreneurship. The willingness and ability to start a new business.

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Glossary

final product. Consumer product, that is, a product purchased by consumers.

infrastructure. The transportation systems and utilities necessary for a modern economy.

labor. Workers; the people who turn resources into products; also called human resources.

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Glossary

land. All the natural resources that a nation has.

natural resources. Raw materials; examples include soil, water, minerals, plants, animals, and climate.

opportunity cost. Value of the opportunity you did not choose.

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Glossary

scarcity. Condition in which there are not enough resources to meet needs.

technology. Use of tools to improve human life.

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