Economic Basics

Economics

​Every day, people all over the world purchase goods and services from other people. Goods are products that people use, such as food and tools. Services are things that people do. For example, a school nurse provides a service by helping students who are sick and hurt.

​Scarcity & Choice

​Economists, who study economics, say that we all face the same basic problem. This problem is scarcity.

​Scarcity is when there are not enough resources to meet people's wants.

Scarcity forces us to make choices. We must decide what things we need and want. Choices always come with costs. For every choice you make, you give up something else. In economics that us called a tradeoff.

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​Can you think of a time you made a huge tradeoff?

​​The value of the thing you give up in a tradeoff is called an opportunity cost.

​For example, suppose you get money for your birthday. You want to use it to buy a new video game, but your friends invite you out to the movies. You don't have enough money for both. If you choose the game, the value of the movies is the opportunity cost.

Multiple Choice

What is the economy?

• a system of producing, selling, & buying goods an services

• a system of trading off something for something more important

• a situation where you don't have enough money to go to the movies

Multiple Choice

What is scarcity?

• money an individual makes from a job

• the issue of having unlimited human wants in a world of limited resources

• value of the thing that we give up

Multiple Choice

What is an opportunity cost?

• additional money that is made from a unique opportunity

• problem of having more wants than available resources

• system of buying or selling goods

• the value of the thing that is given up when a choice is made

​Supply & Demand

​Whenever you buy something, you make a choice about the product & the price. Your choice and those of other consumers help determine what sellers will produce and what they will charge for it.

​The price of a good or service is usually determined by the laws of supply and demand.

​Supply is the amount of a good or service that businesses are willing and able to produce.

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​Demand is the desire to have a good or service and the number of people who are ready to buy it at a certain price.

​Incentives

​Incentives, or benefits, also influence economic activity. Profit is a major incentive for both individuals and businesses.

Profit is the money an individual or business has left after paying expenses.

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​Someone give me an example of an individual or business making a profit.

Multiple Choice

What is supply?

• the desire for a good or service

• the amount of money you have left after expenses are paid

• the amount of a good or service that is available for purchase

• the popularity of a good or service

Multiple Choice

What is demand?

• the desire to have a good or service and the number of people ready to buy it

• system of buying and selling goods and services

• the issue of running out of supplies

Multiple Choice

When there is a shortage the price will usually? 

• rise
• fall
• remain the same
• equilibrium

Multiple Choice

When the demand for a product or service is higher than the supply this causes what?

• shortage
• consumer
• surplus
• equilibrium

Multiple Choice

What is a want?

• A person
• Something you would like to have but don't need to live
• Purple
• Something you need to live

Multiple Choice

What is a need?

• Nothing
• Something you have to have to live
• Something you would like to have
• Ice cream

Multiple Choice

_____________ are things that people make or use to satisfy their needs and wants.

• Goods

• Services

• Producers

• Consumers

Multiple Choice

________________ are activities that satisfy people’s needs and wants.

• Goods

• Services

• Needs

• Wants