This study guide covers economics concepts including goods and services, resources, scarcity, and the four basic economic questions. It also discusses the three main types of economic systems - traditional, command, and market economies. Traditional economies rely on customs passed down through generations. Command economies involve central planning by an authority. Market economies are based on voluntary exchange between individuals and businesses. The study guide provides examples and discusses advantages and disadvantages of each system.

1. Study Guide: Social Studies Test on
2/03/2012

2. Chapter 1:
Economics in
this world

3. Economics: What is it?
 Economics is about producing and
consuming goods and services
 Also about buying these goods and services
 Making choices
 If you buy food, that is involved in economics;
if you go to the doctor, that is involved in
economics as well
 Economics is a part of almost everything that
you do.

4. Goods and Services
 Goods- Products; things you can touch
and use
 Services- Things people do for someone
else
 Example: You bought gas at the gas
station
 Gas- a good
 Gas station attendants serving oil- a
service

5. Examples of goods and
services
Goods Services
Goods
 Computers Services
 Check-up from doctor
 Bicycles  Waiter serving food
 Apples  Musicians
 Books  Teachers
 Dolls  Clerks
 Jackets  Truck drivers to carry
 Telephones your mail
 Socks  People who take your
 Shoes
money at the resister
 Etc.
 Etc.

6. Economic Choices
A basic economic question is, “ How will
we use our scarce resources to satisfy our
needs and wants?”
 This is a question that a lot of groups and
individuals use everyday.

7. (Physical)Needs
 (Physical) needs- things that are necessary for
life.
 These are some basic physical needs for
people:
 Air, water, iPods, food, clothing, TVs, shelter,
and heat
 All of these are necessary. The crossed out
ones are not. This is why iPods and TVs are not
needs; they are wants.
 Not permanently satisfied

8. Psychological Wants
 Wants are NOT necessary for life. They are things
that people want to make them happy.
 Every person has different wants.
 Wants are based on where and when people
live.
 Ex) iPads were not people’s wants in the 1910s.
Now they are.
 Ice cream, pair of boots, dolls, etc.
 Not permanently satisfied

9. Resources
 Resources- what people use to make the things
to satisfy their needs and wants.
 These are the three basic types of resources:
Natural Resources- things found in nature
People- Made Resources- things made by people and used to
make more
Human Resources- labor

10. Examples of Resources
Natural People-Made Human
Resources Resources Resources
 Air  Tools • Ideas
• Work that people
 Water  Factories do
• Energy
 Plants  Machineries
• Training
 Minerals  computers
 Animals

11. Scarcity
 Scarcity- when there is a gap between
needs and wants on one hand and
available resources, goods, services on
the other hand.
 Scarcity exists when needs or wants are
greater than available resources, goods,
or services.

12. Chapter 2:Four
economic
questions

13. The four basic economic
questions
 1.What…?
 2.How…?
 3.How many/How much…?
 4.Who…?

14. 1. What…?
 Thistype of question deals with what
outputs will be produced or consumed
 Examples:
-What will the farmer grow?
-What will the factories make?
-What will the tax money be spent for?

15. 2. How…?
 Thistype of question deals with how
outputs are produced and how resources
are used.
 Examples:
-How will the factories make a table?
-How will the farmer grow apples?
-How will they make clothes?

16. 3. How Much/How Many…?
 Thistype of question deals with how much
or how many resources will be used. It also
deals with how fast resources will be used
up.
 Examples:
-How many trees will be cut? For how
long can we use them?
-How many tables will be made?

17. 4. Who…?
 This type of question deals with the
distribution of output. These questions are
affected by the costs of goods and
services.
 Examples:
-Who will make the desks?
-Who will be the gas-station
attendant?

18. Alternative Cost
 Alternative Costs- what is given up when
a scarce resource is used in a certain
way.
 Example: You wanted to get 2 video
games. However, you only had the
money to get one. You decide to get the
1st game. The other video game is an
alternative cost.

19. Economic Conflict
 Economic conflicts are based on values,
beliefs, and opinions. The decision
depends on who makes the decision.
 Example: Workers want to get more
money for their work but their bosses
doesn’t wants to.

20. Ways to settle Economic
Conflicts
These are two ways that an economic
conflict can be settled:
• Market Bargaining
• Government Actions

21. Chapter 2:
Economic
Systems

22. Economic System
 Economic Systems- a way of making
economic choices and decisions.
 Three basic types of economic systems:
-Traditional Economies
-Command Economies
-Market Economies

23. Traditional Economies
In a traditional economy, economic
decisions are based on tradition and
custom.
 Children learn skills from their parents.
 The same goods and services are
produced generation after generation.

24. Advantages and
Disadvantages of a Traditional
Economy
Advantages:
 It is very stable. People know what to
expect.
 No one is left out.
Disadvantages:
 Individuals don’t have much choice of
what they do.
 Changes come very slowly.

25. Command Economies
Command Economies- Economies in which
a central authority makes all of the
decisions.
Central authority:
☀ A king, dictator, powerful politician party,
etc.

26. Advantages of Command
Economies
Advantages:
 Changes in what and how things are
produced. It is also produced fairly
quickly.
 The needs of the entire country can be
considered by the central authority.

27. Disadvantages of Command
Economies
 Individuals are not encouraged to make
new ideas.
 Individuals do not see why they should
work hard.
 Individuals do not always get their needs
and wants.
 Power is kept by very few people- who
often abuses the power for their benefit.

28. Market Economies
Market economies-the result of millions of
buying and selling decisions made by
millions of individuals.
 The U.S. economy is basically a market
economy.

29. Advantages of Market
Economies
 A lot of people are involved in making
economical decisions.
 Individuals can work on whatever they want
to and are encouraged to develop new
ideas.
 Producers can produce whatever they wish.
 The economy is flexible.
 Consumers are free to buy the goods and
services they choose.

30. Disadvantages of Market
Economies
 Individuals have no way of meeting their
needs.
 There is no guarantee that individuals will
succeed in their work.
 The needs of society as a whole is
overlooked; often not the needs of a
individual.
 The economy goes through ups and
downs called business cycles.

31. Bibliography
 Our Economic System
By: Clairece Fegin
 Mr. Schiff