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Economic Decisions and Systems

Chapter 1

Amy Harkins

on 3 January 2013

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Transcript of Economic Decisions and Systems

Finally Projects:
Complete the following projects:
Island Simulation
American Enterprise Project
Life-Span Project
Economic Systems Poster Project
Standards Economic Decisions and Systems BCS-BE-6: The student demonstrates an understanding of basic business concepts and how they are applied to business activities.
f. Describes how government affects business.
SSEF1: The student will explain why limited productive resources and unlimited wants result in scarcity, opportunity costs and trade offs for individuals, businesses and governments.
SSEF4: The student will compare and contrast different economic systems, and explain how they answer the three basic economic questions of what to produce, how to produce, and for whom to produce. Satisfying Needs and Wants Goals
Explain the difference between needs and wants.
Distinguish between goods and services.
Describe the types of economic resources Economic Systems Goals:
Identify three economic questions.
Differentiate among the main types of economic systems.
Describe the economic system of the United States. Economic Choices Goals:
Describe the basic economic problem.
Explain the steps in the decision-making process. Supply and Demand Goals:
Describe supply and demand orally and with graphs.
Discuss how supply and demand affect prices of products and services. Needs are essential
Wants add to the quality of life
Needs and wants are unlimited NEEDS AND WANTS What is the difference between a need and a want?
Needs are those things required to live, such as food, clothing, and shelter.
Wants are things that add comfort and pleasure to our lives such as television, music CDs, and movies. Goods and services for businesses and consumers
The U.S. economy GOODS AND SERVICES Checkpoint  How do people satisfy their wants and needs?
People satisfy their wants and needs by purchasing and consuming goods and services. Natural resources
Human resources
Capital resources
Resources are limited ECONOMIC RESOURCES What are the three types of economic resources? Give an example of each type.
Natural: water, land, trees, animals, and minerals.
Human: labor (people who run farms and factories, transport goods, provide services, or manage businesses).
Capital: money, land, buildings, tools, and equipment. Choices
Trade-offs and opportunity costs THE BASIC ECONOMIC PROBLEM What is opportunity cost?
Opportunity cost is the value of the next best alternative that you don’t choose.
It is what you are willing to give up in order to have your first choice. Checkpoint  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. THE DECISION-MAKING PROCESS What are the six steps in the decision-making process?
Define the problem.
Identify the choices.
Evaluate advantages and disadvantages of each alternative.
Choose one.
Act on your choice.
Review your decision. What to produce?
How to produce?
What needs and wants to satisfy? THE THREE ECONOMIC QUESTIONS What are the three economic questions?
What goods and services will be produced?
How will the goods and services be produced?
What needs and wants will be satisfied with the goods and services? Checkpoint  Command economy
Market economy
Traditional economy
Mixed economies TYPES OF ECONOMIC SYSTEMS What are the main differences among the three economic systems?
The main differences among the economic systems are found in the ways in which the three economic questions are answered. Private property
Freedom of choice
Competition THE U.S. ECONOMIC SYSTEM Name the four principles of the U.S. economic system.
Private property
Freedom of choice
Competition PARTICIPATING IN A MARKET ECONOMY Consumers set demand
Producers establish supply
A graphic view DEMAND AND SUPPLY How does the price of a product affect demand and supply?
As prices decrease, the number of consumers willing and able to purchase the product (demand) will increase.
As prices increase, businesses will be willing to supply larger quantities of the product. Checkpoint  Factors influencing demand
Factors influencing supply
Determining market price DETERMINING PRICE MARKET PRICE How is the market price for a product determined?
Supply, demand, and competition determine the market price for a product or service.
The market price is the point at which supply and demand are equal.
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