Economics Unit Notes

7/29/2019 Economics Unit Notes

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A society in which most economicdecisions are based on customs.

Traditional Economy1


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A society in which the governmentmakes the economic decisions.

Command Economy2


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A society in which economicdecisions are made by individuals

and businesses.

Free Market Economy3


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A society in which economicdecisions are made by individuals

and businesses with somegovernment regulations.

Mixed Economy4


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A business owned by one person.

Proprietorship5


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A business that has two or moreowners that share risks and profits.

Partnership6


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A business owned by stockholders(investors) whose risk is limited to

the amount of their investment.

Corporation7


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A business owned by the people thatuse its services.

Cooperative8


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Someone who purchased goods orservices for personal use.

Consumer9


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A business that produces or providesgoods and/or services.

Producer10


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Scarcity means that resources arelimited. The two most commonlimited resources are time and

money.

Scarcity11


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Because of scarcity, people,businesses, and government have to

make choices.

Choices12


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When you give up a second choice,that choice is called the opportunity

cost.

Opportunity Cost13


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Natural Resources are provided bynature.

Natural Resources14


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Capital Resources are the tools andequipment a business uses to

produce goods or services.

Capital Resources15


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Human Resources are the labor andskills people provide to businesses.

Human Resources16


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The diagram shows the circular flow

in economics.

Circular Flow17


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Households sell labor and skills to

businesses.

Labor and Skills18


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Households buy goods and services

from businesses.

Goods and Services19


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Supply is determined by producers.

Supply20


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Demand is determined byconsumers.

Demand21


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Price is determined by the interactionof supply and demand.

Price22


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Lets look at how this

interaction between supplyand demand works, how

price is determined.


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For some people, a long day at thebeach is best ended with a big juicy

cheeseburger.
http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=HkbSUzZGMQLKUM&tbnid=F7qs5TsdyKNJ4M:&ved=0CAUQjRw&url=http://www.pathaverfield.com/food-one/bacon-cheeseburger-4_13_189.html&ei=vvVIUYPVCors9ATbooHYDA&bvm=bv.44011176,d.eWU&psig=AFQjCNH5N7LtH9OGmMzgwhZGGeemamsEdA&ust=1363822385575135http://www.google.com/url?sa=i&source=images&cd=&cad=rja&docid=WKW47RkGZXedOM&tbnid=4Tvp52iixvOnjM:&ved=0CAUQjRw&url=http://www.rocknflops.com/&ei=RfVIUZnmC4qm9gSu4IAw&psig=AFQjCNEMJD7XFMuKjCi6Y56TJEsVK5tRiQ&ust=1363822259359563


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But how much will that cheeseburgercost?

Whatdetermines its

price?
http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=HkbSUzZGMQLKUM&tbnid=F7qs5TsdyKNJ4M:&ved=0CAUQjRw&url=http://www.pathaverfield.com/food-one/bacon-cheeseburger-4_13_189.html&ei=vvVIUYPVCors9ATbooHYDA&bvm=bv.44011176,d.eWU&psig=AFQjCNH5N7LtH9OGmMzgwhZGGeemamsEdA&ust=1363822385575135


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Of course the restaurants can putany price they want on the menu.

But what willhappen if theprice is higherthan people

are willingand able to

pay?

$3.75

$2.50

$1.98

$5.98
http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=HkbSUzZGMQLKUM&tbnid=F7qs5TsdyKNJ4M:&ved=0CAUQjRw&url=http://www.pathaverfield.com/food-one/bacon-cheeseburger-4_13_189.html&ei=vvVIUYPVCors9ATbooHYDA&bvm=bv.44011176,d.eWU&psig=AFQjCNH5N7LtH9OGmMzgwhZGGeemamsEdA&ust=1363822385575135http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=HkbSUzZGMQLKUM&tbnid=F7qs5TsdyKNJ4M:&ved=0CAUQjRw&url=http://www.pathaverfield.com/food-one/bacon-cheeseburger-4_13_189.html&ei=vvVIUYPVCors9ATbooHYDA&bvm=bv.44011176,d.eWU&psig=AFQjCNH5N7LtH9OGmMzgwhZGGeemamsEdA&ust=1363822385575135http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=HkbSUzZGMQLKUM&tbnid=F7qs5TsdyKNJ4M:&ved=0CAUQjRw&url=http://www.pathaverfield.com/food-one/bacon-cheeseburger-4_13_189.html&ei=vvVIUYPVCors9ATbooHYDA&bvm=bv.44011176,d.eWU&psig=AFQjCNH5N7LtH9OGmMzgwhZGGeemamsEdA&ust=1363822385575135http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=HkbSUzZGMQLKUM&tbnid=F7qs5TsdyKNJ4M:&ved=0CAUQjRw&url=http://www.pathaverfield.com/food-one/bacon-cheeseburger-4_13_189.html&ei=vvVIUYPVCors9ATbooHYDA&bvm=bv.44011176,d.eWU&psig=AFQjCNH5N7LtH9OGmMzgwhZGGeemamsEdA&ust=1363822385575135


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If restaurants set the price too low,they may sell out before the end of

the day.

So the price cant

just be set by therestaurants.

Customers playan important

role.

$3.75

$2.50

$1.98

$5.98

k ll h
http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=HkbSUzZGMQLKUM&tbnid=F7qs5TsdyKNJ4M:&ved=0CAUQjRw&url=http://www.pathaverfield.com/food-one/bacon-cheeseburger-4_13_189.html&ei=vvVIUYPVCors9ATbooHYDA&bvm=bv.44011176,d.eWU&psig=AFQjCNH5N7LtH9OGmMzgwhZGGeemamsEdA&ust=1363822385575135http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=HkbSUzZGMQLKUM&tbnid=F7qs5TsdyKNJ4M:&ved=0CAUQjRw&url=http://www.pathaverfield.com/food-one/bacon-cheeseburger-4_13_189.html&ei=vvVIUYPVCors9ATbooHYDA&bvm=bv.44011176,d.eWU&psig=AFQjCNH5N7LtH9OGmMzgwhZGGeemamsEdA&ust=1363822385575135http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=HkbSUzZGMQLKUM&tbnid=F7qs5TsdyKNJ4M:&ved=0CAUQjRw&url=http://www.pathaverfield.com/food-one/bacon-cheeseburger-4_13_189.html&ei=vvVIUYPVCors9ATbooHYDA&bvm=bv.44011176,d.eWU&psig=AFQjCNH5N7LtH9OGmMzgwhZGGeemamsEdA&ust=1363822385575135http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=HkbSUzZGMQLKUM&tbnid=F7qs5TsdyKNJ4M:&ved=0CAUQjRw&url=http://www.pathaverfield.com/food-one/bacon-cheeseburger-4_13_189.html&ei=vvVIUYPVCors9ATbooHYDA&bvm=bv.44011176,d.eWU&psig=AFQjCNH5N7LtH9OGmMzgwhZGGeemamsEdA&ust=1363822385575135


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Lets say we ask all the customers at

the beach how many cheeseburgers

they would be willing to buy atvarious prices.
http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=zOD0L9tu6MoKaM&tbnid=cX4Icq2RrW148M:&ved=0CAUQjRw&url=http://nexxtlevelup.com/everything-else/survey-time&ei=_PdIUeOEA4j28gTQ9ICQDg&bvm=bv.44011176,d.eWU&psig=AFQjCNE5ErQNkwUQ1sJkDGTQeKuA4eDxOw&ust=1363822938050756http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=HkbSUzZGMQLKUM&tbnid=F7qs5TsdyKNJ4M:&ved=0CAUQjRw&url=http://www.pathaverfield.com/food-one/bacon-cheeseburger-4_13_189.html&ei=vvVIUYPVCors9ATbooHYDA&bvm=bv.44011176,d.eWU&psig=AFQjCNH5N7LtH9OGmMzgwhZGGeemamsEdA&ust=1363822385575135


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The tableshows the total

number ofcheeseburgers

the people arewilling to buy.Notice as the

price goes up,they are less

willing to buy.

PriceQuantity

Demanded

$1.00 4,000

$2.00 2,500

$3.00 1,750

$4.00 1,250

$5.00 800

$6.00 500

This is called ademand schedule.


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Now lets ask the restaurants how

many cheeseburgers they would bewilling to sell at various prices.

Th t bl
http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=zOD0L9tu6MoKaM&tbnid=cX4Icq2RrW148M:&ved=0CAUQjRw&url=http://nexxtlevelup.com/everything-else/survey-time&ei=_PdIUeOEA4j28gTQ9ICQDg&bvm=bv.44011176,d.eWU&psig=AFQjCNE5ErQNkwUQ1sJkDGTQeKuA4eDxOw&ust=1363822938050756http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=HkbSUzZGMQLKUM&tbnid=F7qs5TsdyKNJ4M:&ved=0CAUQjRw&url=http://www.pathaverfield.com/food-one/bacon-cheeseburger-4_13_189.html&ei=vvVIUYPVCors9ATbooHYDA&bvm=bv.44011176,d.eWU&psig=AFQjCNH5N7LtH9OGmMzgwhZGGeemamsEdA&ust=1363822385575135


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The tableshows the total

number ofcheeseburgersthe restaurants

are willing tosell. Notice as

the price goesup, they aremore willing to

sell.

PriceQuantitySupplied

$1.00 500

$2.00 1,700

$3.00 2,500

$4.00 3,100

$5.00 3,600

$6.00 4,000

This is called asupply schedule.

W fi d h ilib i i


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We can find the equilibrium price,the best price for both the consumer

and the producer, by graphing theinformation from the charts.
http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=FnzQt0p2AMSNeM&tbnid=k8Kl7APDG6UvSM:&ved=0CAUQjRw&url=http://www.tv411.org/math/basic-math/how-read-bar-graph&ei=6ftIUdX4HYek9ATaioDYCw&bvm=bv.44011176,d.eWU&psig=AFQjCNEOmzTKtixSV0KCkgsLjkBghOprPA&ust=1363823926453684


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1

4

3

6

5

2

4500750 300022501500 3750

Price

($)

Q tit

SupplyDemand

Equilibrium Price

Economics Unit Notes

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