Chapter 1

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Chapter 1

  1. 1. Chapter 1
  2. 2. Satisfying needs and wants• Need: Things that are required in order to live• Wants: Things that comfort and pleasure to your life• Good: Things that you can see and touch• Services: Activities that are consumed at the same time they are produced
  3. 3. OPPORTUNITY COST• Economic decision-making-process of choosing which wants, among several options, will be satisfied• Tradeoff-when you give up something to have something else• Opportunity cost- the value of the next-best alternative that you did not choose
  4. 4. The Decision Making Process• Define the problem• Identify the choices• Evaluate the pros and cons of the choices• Choose one• Act on your choice• Review your decision
  5. 5. 3 Economic Questions• What to produce• How to produce• For whom to produce
  6. 6. • Command Economy-resources are owned and controlled by the government• Market Economy- resources are owned and controlled by the people of the country
  7. 7. • Traditional economy-goods and services are produced the way it has always been done• Mixed economy-combines elements of the command and market economies
  8. 8. • Capitalism-private ownership of resources by inividuals rather than by their government• Competition-rivalry among businesses to sell their goods and services• Profit-is the money left from sales after all of the cost of operating business has been paid
  9. 9. Supply and Demand• Consumer: A person who buys and uses goods and services• Producers: Individual and organizations that determine what products and services will be available for sale
  10. 10. • Demand: Quantity of a good or service that consumers are willing and able to buy• Supply: quantity of a good or service that business is willing and able to provide
  11. 11. •Market price: point where supply and demand are equal

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