This document provides an overview of Chapter 1 from an economics textbook. It introduces key concepts such as scarcity, factors of production, and the three basic economic questions that every society must address regarding what, how, and for whom to produce. It also summarizes the four key elements of economics: description, analysis, explanation, and prediction.

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2. Chapter 1
What Is Economics?

3. CHAPTER INTRODUCTION
SECTION 1 Scarcity and the Science
of Economics
SECTION 2 Basic Economic Concepts
SECTION 3 Economic Choices and
Decision Making
CHAPTER SUMMARY
CHAPTER ASSESSMENT
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4. Economics and You
The study of economics will help you
become a better decision maker–it helps
you develop a way of thinking about how
to make the best choices for you.
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to listen to Economics
and You.

5. Chapter Objectives
Section 1: Scarcity and the Science of
Economics
• Explain the fundamental economic
problem. 
• Examine the three basic economic
questions every society must decide.
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to display the information.

6. Chapter Objectives
Section 2: Basic Economic Concepts
• Explain the relationship among scarcity,
value, utility, and wealth. 
• Understand the circular flow of economic
activity.
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to display the information.

7. Chapter Objectives
Section 3: Economic Choices and
Decision Making
• Analyze trade-offs and opportunity costs.
• Explain decision-making strategies.
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to display the information.


8. Click the mouse button to return to the Contents slide.

9. Study Guide
Main Idea
Scarcity forces us to make choices. We can’t have
everything we want, so we are forced to choose
what we want most. 
Reading Strategy
Graphic Organizer As you read the section,
complete a graphic organizer like the one on
page 5 of your textbook by listing and describing
the three economic choices every society must
make.
Click the mouse button or press the Space Bar to display the
information. Section 1 begins on page 5 of your textbook.

10. Study Guide (cont.)
Key Terms
– scarcity 
– economics 
– need 
– want 
– factors of production 
– land 
– capital 
– financial capital 
– labor 
– entrepreneur 
– production 
– Gross Domestic
Product (GDP)
Click the mouse button or press the Space Bar to display the
information. Section 1 begins on page 5 of your textbook.

11. Study Guide (cont.)
Objectives
After studying this section, you will be able to: 
– Explain the fundamental economic problem. 
– Examine the three basic economic questions
every society must decide. 
Applying Economic Concepts
Scarcity Why is scarcity the basic economic
problem that everyone faces?
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listen to the Cover Story.
Click the mouse button or press the Space Bar to display the
information. Section 1 begins on page 5 of your textbook.

12. Introduction
• Do you think the study of economics is
worth your time and effort? 
• According to a Harris poll, a huge
percentage of Americans think it is.

• They must know what economists know—
that a basic understanding of economics
can help make sense of the world around
us.
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13. Did You Know?
• We witness scarcity with each year’s “hot”
new toy. Inspired by hunter President
Teddy Roosevelt, Americans coveted the
teddy bear in 1906. Cabbage Patch dolls
were big during the 1980s, as were Tickle
Me Elmos in 1996. By 1999 Game Boy’s
Pokémon was the rage with a 10-cent
trading card. The most-prized first-edition
pocket monsters were in such short supply
that they commanded from $8 to $182.
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14. The Fundamental Economic Problem
• Scarcity is the condition where unlimited
human wants face limited resources. 
• Economics is the study of how people
satisfy wants with scarce resources. 
• Needs are required for survival; wants are
desired for satisfaction. 
• Someone has to pay for production costs,
so There Is No Such Thing As A Free
Lunch (TINSTAAFL).
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15. Discussion Question
Why do you think scarcity is an issue
with the rich as well as the poor?
It is a human trait that few people,
regardless of their economic status,
are satisfied with what they have.
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to display the answer.

16. Three Basic Questions
• What must we produce? Society must
choose based on its need. 
• How should we
produce it? Society
must choose based
on its resources. 
Figure 1.1
• For whom should we
produce? Society
must choose based
on its population and
other available
markets.
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17. Discussion Question
How might the economic decisions of a
mountainous island society differ from
those of a mountainous landlocked
society?
An island society has water
resources to consider and likely a
more limited population.
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to display the answer.

18. The Factors of Production
• Factors of production are resources
necessary to produce what people want or
need. 
• Land is the society’s limited natural
resources—landforms, minerals,
vegetation, animal life, and climate.

• Capital is the means by which something
is produced such as money, tools,
equipment, machinery, and factories.
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19. The Factors of Production (cont.)
• Labor is the workers who apply their efforts,
abilities, and skills to production. 
• Entrepreneurs are risk-takers who combine
the land, labor, and capital into new
products. 
• Production is creating goods and services
—the result of land, capital, labor, and
entrepreneurs.
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20. The Factors of Production (cont.)
Figure 1.2
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21. Discussion Question
Why are entrepreneurs an economy’s
driving force?
Their abilities to start new businesses
and introduce new products may reenergize a sluggish economy or
strengthen a successful economy.
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to display the answer.

22. The Scope of Economics
• Economics deals with the description of
economic activity—Gross Domestic
Product, unemployment rate, government
spending, tax rates, etc. 
• Analysis looks at the “why” and “how” of
economic activity—why prices go up and
down, for example, or how taxes affect
savings.
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23. The Scope of Economics (cont.)
• Explanation refers to how economists
communicate knowledge of the economy
and its activities to the society’s
population. 
• Prediction refers to how yesterday’s and
today’s economic activities advise us of
potential future activity.
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24. Discussion Question
What makes economics a social
science?
Economics is a study of human
behavior because it looks at the
decisions people make and how they
react to those decisions.
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to display the answer.

25. Section Assessment
Main Idea Using your notes from the
graphic organizer activity on page 5,
explain why a society must face the
choices about WHAT, HOW, and FOR
WHOM to produce.
Choices must be made as long as
wants are greater than the resources
available.
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to display the answer.

26. Section Assessment (cont.)
Describe the fundamental economic
problem.
Scarcity, the condition that results
from society not having enough
resources to produce all the things
people want, is the fundamental
economic problem.
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to display the answer.

27. Section Assessment (cont.)
List the three basic economic
questions every society must answer.
Every society must ask what to
produce, how to produce, and
for whom to produce.
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to display the answer.

28. Section Assessment (cont.)
Describe the factors of production.
The factors of production are land,
capital, labor, and entrepreneurs.
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to display the answer.

29. Section Assessment (cont.)
List the four key elements of
economics.
The four key elements of economics
are description, analysis, explanation,
and prediction.
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to display the answer.

30. Section Assessment (cont.)
Synthesizing Information Give an
example of a supposedly “free” item
that you see every day. Explain why
the item is not really free by stating
who or what actually pays for it.

31. Section Close
How might the element of prediction
in economics be important in your
lives?

32. Click the mouse button to return to the Contents slide.

33. Study Guide
Main Idea
An economic product is a good or service that is
useful, relatively scarce, and exchangeable. 
Reading Strategy
Graphic Organizer As you read the section,
describe three different transactions that could
take place in the product market. Use a web like
the one on page 12 of your textbook to help you
organize your answer.
Click the mouse button or press the Space Bar to display the
information. Section 2 begins on page 12 of your textbook.

34. Study Guide (cont.)
Key Terms
– economic product 
– good 
– consumer good 
– capital good 
– service 
– value 
– paradox of value 
– utility 
– wealth 
–
–
–
–
–
–
–
–
market 
factor market 
product market 
economic growth 
productivity 
division of labor 
specialization 
human capital 
– economic
interdependence
Click the mouse button or press the Space Bar to display the
information. Section 2 begins on page 12 of your textbook.

35. Study Guide (cont.)
Objectives
After studying this section, you will be able to:
– Explain the relationship among scarcity,
value, utility, and wealth. 
– Understand the circular flow of economic
activity. 

Applying Economic Concepts
Specialization How does specialization
increase production?
Click the Speaker button to
listen to the Cover Story.
Click the mouse button or press the Space Bar to display the
information. Section 2 begins on page 12 of your textbook.

36. Introduction
• Economics, like any other social science,
has its own vocabulary. 
• To understand economics, a review of
some key terms is necessary. 
• Fortunately, most economic terms are
widely used, and many will already be
familiar to you.
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37. Did You Know?
• The 20 percent of the world’s people who
live in the wealthiest nations consume 86
percent of the world’s goods and services.
The 20 percent who live in the poorest
nations consume just 1.3 percent.
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38. Goods, Services, and Consumers
• Goods are items that are economically
useful or satisfy an economic want. They
are tangible and can be classified as
consumer/capital and durable/
nondurable. 
• Services are work performed for someone
and are intangible. 
• Consumers use goods and services to
satisfy wants and needs.
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39. Discussion Question
Why do you think the United States
has been called a “society of
consumption”?
Answers will vary. Students should
support their opinions with examples.
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to display the answer.

40. Value, Utility, and Wealth
• Value is worth expressed in dollars and
cents. Scarcity by itself is not enough to
create value. For something to have value,
it must also have utility. 
• Utility is a good’s or service’s capacity to
provide satisfaction, which varies with the
needs and wants of each person. 
• Wealth is the accumulation of goods that
are tangible, scarce, useful, and
transferable to another person. Wealth
does not include services.
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41. Discussion Question
Why might a wealthy society not have
as much economic staying power as
another wealthy society with a highly
skilled labor force?
Answers will vary. Students may
indicate that wealth is usually based
on limited natural resources, whereas
labor can produce more goods and
services.
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to display the answer.

42. The Circular Flow of Economic
Activity
• Markets are locations/mechanisms for
buyers and sellers to trade. They are
classified as local, regional, national,
global, and cyberspace. 
• A factor market is where people earn their
incomes. Factor markets center on the four
factors of production: land, capital, labor,
and entrepreneurs. 
• A product market is where people use their
income to buy from producers. Product
markets center on goods and services.
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43. The Circular Flow of Economic
Activity (cont.)
Figure 1.3
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44. Discussion Question
How are landlords a part of a factor
market?
They provide land or property (a
factor of production) to consumers in
exchange for rent money, which is
the landlords’ source of income.
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45. Productivity and Economic Growth
• Productivity is a measure of the amount of
output produced by the amount of inputs
within a certain time. Productivity increases
with efficient use of scarce resources. 
• Specialization and division of labor may
improve productivity because they lead to
more proficiency (and greater economic
interdependence).
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46. Productivity and Economic Growth
• Investing in human capital improves
productivity because when people’s skills,
abilities, health, and motivation advance,
productivity increases. 
• Economic growth depends on high
productivity. Yet, an economy’s
productivity may be affected by its
interdependence—reliance on others and
their reliance on us to provide goods and
services.
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47. Discussion Question
How may economic interdependence
be a strength of an economy? A
weakness?
Answers will vary. Students may
indicate that the economy may gain
larger, more diverse markets, leading
to greater income and productivity.
But the economic problems of those
additional markets (customers or
suppliers) may adversely affect the
economy’s production output or
customer base.
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48. Section Assessment
Main Idea Using your notes from the
graphic organizer activity on page 12,
explain the different transactions that
take place in the product market.
The buying and selling of goods and
services, and using money from
sales to produce more goods takes
place in the product market.
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to display the answer.

49. Section Assessment (cont.)
Discuss the relationship among
scarcity, value, utility, and wealth.
Answers will vary.
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to display the answer.

50. Section Assessment (cont.)
Describe the circular flow of economic
activity.
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to display the answer.

51. Section Assessment (cont.)
Explain why productivity is important
to economic growth.
When productivity goes up, more
output is produced with the same
amount of inputs in the same amount
of time.
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to display the answer.

52. Section Assessment (cont.)
Making Comparisons What is the
difference between a durable good and
a nondurable good?
A durable good lasts three or more
years when used on a regular basis.
A nondurable good lasts for less than
three years.
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to display the answer.

53. Section Assessment (cont.)
Drawing Conclusions In what way
do businesses and households both
supply and demand in the circular flow
model?
Businesses supply goods while
demanding resources; households
supply labor and income while
demanding goods.
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54. Section Close
Discuss ways in which your
community, state, or region
specializes in the goods and
services it provides. Analyze and
evaluate the areas these resources
come from. What makes them
unique?

55. Click the mouse button to return to the Contents slide.

56. Study Guide
Main Idea
Trade-offs are present whenever choices are
made. 
Reading Strategy
Graphic Organizer As you read this section,
complete a graphic organizer similar to the one
on page 19 of your textbook by explaining what
you need to know to become a good decision
maker.
Click the mouse button or press the Space Bar to display the
information. Section 3 begins on page 19 of your textbook.

57. Study Guide (cont.)
Key Terms
– trade-off 
– opportunity cost 
– production possibilities frontier 
– cost-benefit analysis 
– free enterprise economy 
– standard of living
Click the mouse button or press the Space Bar to display the
information. Section 3 begins on page 19 of your textbook.

58. Study Guide (cont.)
Objectives
After studying this section, you will be able to: 
– Analyze trade-offs and opportunity costs. 
– Explain decision-making strategies. 
Applying Economic Concepts
Opportunity Costs How are your decisions
measured in terms of opportunity costs?
Click the Speaker button to
listen to the Cover Story.
Click the mouse button or press the Space Bar to display the
information. Section 3 begins on page 19 of your textbook.

59. Introduction
• The process of making a choice is not
always easy. 
• Because resources are scarce, consumers
need to make wise choices. 
• To become a good decision maker, you
need to know how to identify the problem
and then analyze your alternatives. 
• Finally, you have to make your choice in a
way that carefully considers the costs and
benefits of each possibility.
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to display the information.

60. Did You Know?
• Economists reward their greatest for
breakthrough discoveries. The 1999 Nobel
Prize for Economics went to Robert A.
Mundell, a Canadian economist at New
York’s Columbia University, for his careerlong work in international currency
exchange rates, vital in today’s global
marketplace. The prize is worth a million
dollars in U.S. currency.
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61. Trade-Offs and Opportunity Cost
• Trade-offs are the alternative choices
people face in making an economic
decision. A decision-making grid lists the
advantages and disadvantages of each
choice. 
• Opportunity cost is the cost of the next best
alternative among a person’s choices. The
opportunity cost is the money, time, or
resources a person gives up, or sacrifices,
to make his final choice.
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62. Trade-Offs and Opportunity Cost (cont.)
Figure 1.5
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63. Discussion Question
Why do you think economists believe
opportunity cost is an important factor
to consider in addition to monetary
cost?
The money, time, or resources given
up when one choice is made rather
than another are just as important as
the monetary cost of the choice that
was made.
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to display the answer.

64. Production Possibilities
• The production possibilities frontier diagram
illustrates the concept of opportunity cost.
It shows the combinations of goods and/or
services that can be produced when all
productive resources are used. The line on
the graph represents the full potential—the
frontier—when the economy employs all of
these productive resources. 
• Identifying possible alternatives allows an
economy to examine how it can best put its
limited resources into production.
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65. Production Possibilities
(cont.)
• Considering different ways to fully employ
its resources allows an economy to analyze
the combination of goods and services that
leads to maximum output. 
• An economy pays a high cost if any of it
resources are idle. It cannot produce on its
frontier and it will fail to reach its full
production potential. 
• Economic growth made possible by more
resources, a larger labor force, or
increased productivity causes a new
frontier for the economy.
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66. Production Possibilities
(cont.)
Figure 1.6
The Production Possibilities Frontier
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67. Production Possibilities
(cont.)
Figure 1.6
The Production Possibilities Frontier
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68. Production Possibilities
(cont.)
Figure 1.6
The Production Possibilities Frontier
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69. Discussion Question
How might economic growth stimulate
greater production possibilities?
Answers will vary. Students may
indicate that with a larger labor force,
more goods and services are
created; newly discovered natural
resources open up new products and
services.
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to display the answer.

70. Thinking Like an Economist
• Building simple models helps economists
analyze or describe actual economic
situations. 
• Cost-benefit analysis helps economists
evaluate alternatives by looking at each
choice’s cost and benefit. 
• Taking small, incremental steps in
implementing an economic decision helps
economists test whether the estimated cost
of the decision was correct.
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71. Discussion Question
What behaviors and personality traits
might you observe in the most
successful economists?
Answers will vary. Students should
support their opinions with a
rationale.
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to display the answer.

72. The Road Ahead
• Studying economics will help us know how
the economy works on a daily basis. 
• It helps us understand a free enterprise
economy, where people and privately
owned businesses rather than the
government make the majority of the
economic decisions. 
• The study of economics helps us to
become better decision makers. 
• The world of economics is complex and
dynamic, as is our society.
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73. Discussion Question
What single economic goal have you
set for yourself as a result of your study
of economics?
Answers will vary. Students must
indicate an economic goal rather than
an educational goal.
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to display the answer.

74. Section Assessment
Main Idea Using your notes from the
graphic organizer activity on page 19,
explain what people try to achieve
when they make decisions or trade-offs.
When making economic decisions,
people try to get the most value for
their investment, whether it be time,
money, or something else.
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to display the answer.

75. Section Assessment (cont.)
Describe the relationship between
trade-offs and opportunity costs.
All economic decisions involve tradeoffs. The opportunity cost of a choice
is the cost of the next best use of
money, time, or resources.
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to display the answer.

76. Section Assessment (cont.)
List the decision-making strategies
that economists use.
Economists use the circular flow
diagram, production possibilities
frontier, and cost-benefit analysis.
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to display the answer.

77. Section Assessment (cont.)
Explain why the study of economics is
important to the American free
enterprise system.
Economic issues are an important
part of many political campaigns. An
understanding of the issues will help
a citizen decide how to vote in an
election.
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to display the answer.

78. Section Assessment (cont.)
Making Generalizations Study the
decision-making grid on page 20 of
your textbook. Explain the advantages
of using such a grid to evaluate
alternatives.
Such a grid helps organize and
explain the various choices when
decision making.
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to display the answer.

79. Section Close
How might the production
possibilities frontier change if new
technology were applied to the
production of guns but not to the
production of butter?

80. Click the mouse button to return to the Contents slide.

81. Section 1: Scarcity and the Science
of Economics
• The basic economic problem of scarcity is due to
the combination of people’s seemingly unlimited
wants and relatively scarce resources. 
• In a world of scarce resources, There Is No Such
Thing As A Free Lunch (TINSTAAFL). 
• Because of scarcity, society has to decide WHAT,
HOW, and FOR WHOM to produce. 
• Land, capital, labor, and entrepreneurs are the
four factors of production required to produce
the things that people use.
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to display the information.

82. Section 1: Scarcity and the Science
of Economics (cont.)
• Entrepreneurs are risk-taking individuals who go
into business in order to make a profit; they
organize the other factors of production. 
• The scope of economics deals with description,
analysis, explanation, and prediction.
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83. Section 2: Basic Economic Concepts
• Consumers use goods and services to satisfy
their wants and needs. 
• Something has value when it has utility and is
relatively scarce. 
• Wealth consists of products that are scarce,
useful, and transferable to others, but wealth
does not include services, which are intangible. 
• Markets link individuals and businesses in the
circular flow of economic activity; the factors of
production are traded in factor markets; goods
and services are traded in the product markets.
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84. Section 2: Basic Economic Concepts
(cont.)
• Productivity and investments in human capital
help economic growth; investments in human
capital are among the most profitable of all
investments. 
• Increases in specialization and division of labor
cause more economic interdependence.
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to display the information.

85. Section 3: Economic Choices and
Decision Making
• The opportunity cost of doing something is the
next best alternative, or trade-off, that you give
up. 
• A decision-making grid can be used to help
evaluate alternatives. 
• A production possibilities frontier shows the
various possible combinations of output that can
be produced when all resources are fully
employed; production inside the frontier occurs
when some resources are idle or are not being
used to their maximum capability.
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to display the information.

86. Section 3: Economic Choices and
Decision Making (cont.)
• When economic growth takes place, the
production possibilities frontier shifts outward,
showing that more products are produced than
before. 
• The economic way of thinking involves
simplification with model building, cost-benefit
analysis to evaluate alternatives, and incremental
decision making. 
• The study of economics will make you a better
decision maker and will help you to understand
the world around you; however, the study of
economics will not tell you which decisions to
make.
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87. Section 3: Economic Choices and
Decision Making (cont.)
• The study of economics helps people understand
how a free enterprise economy makes the
WHAT, HOW, and FOR WHOM decisions.

88. Click the mouse button to return to the Contents slide.

89. Identifying Key Terms
Choose the letter of the term that best completes the following
sentences.
B
___ Economic products designed to satisfy people’s
wants and needs are called _____ .
J
___ The _____ of a CD player can be expressed in
dollars and cents.
I
___ Haircuts, repairs to home appliances, and
entertainment are examples of _____ .
A.
B.
C.
D.
E.
capital goods
consumer goods
consumers
factors of production
utility
F.
G.
H.
I.
J.
human capital
opportunity cost
scarcity
services
value
Click the mouse button or press the Space Bar to display the
answer. The Chapter Assessment is on pages 28–29.

90. Identifying Key Terms (cont.)
Choose the letter of the term that best completes the following
sentences.
H
___
_____ arises because society does not have
enough resources to produce all the things people
would like to have.
G
___ The _____ of going to a football game instead of
working would include the money not earned at
your job.
F
___ _____ is the sum of the skills, abilities, health, and
motivation of people.
A. capital goods
F. human capital
B. consumer goods
G. opportunity cost
C. consumers
H. scarcity
D. factors of production
I. services
E. utility
J. value
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to display the answer.

91. Identifying Key Terms (cont.)
Choose the letter of the term that best completes the following
sentences.
E
___ _____ is another name for the capacity of a product
to be useful.
A
___ The only factors of production that are themselves
the result of earlier production are _____ .
D
___ Land, capital, labor, and entrepreneurs are _____ .
C
___ People who use goods and services to satisfy their
wants and needs are called _____ .
A.
B.
C.
D.
E.
capital goods
consumer goods
consumers
factors of production
utility
F.
G.
H.
I.
J.
human capital
opportunity cost
scarcity
services
value
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to display the answer.

92. Reviewing the Facts
Identify the cause of scarcity.
having only limited resources to meet
seemingly unlimited wants
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93. Reviewing the Facts (cont.)
List the three basic economic
questions that every society must
face.
WHAT to produce? HOW to produce?
FOR WHOM to produce?
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to display the answer.

94. Reviewing the Facts (cont.)
Describe the factors of production
required to deliver a service like
education.
land; land itself and natural resources;
capital: school building, computers,
financial capital; labor: teachers, other
workers, publishers; entrepreneurs:
people who devise new products and
methods of delivery of educational
material.
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to display the answer.

95. Reviewing the Facts (cont.)
Explain why economics is
considered a social science.
It deals with people’s behavior as
they cope with scarcity.
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96. Reviewing the Facts (cont.)
Describe the relationship between
goods, services, and consumers.
Consumers use goods and services
to satisfy their wants and needs.
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97. Reviewing the Facts (cont.)
Explain why services are excluded
from the measure of wealth.
because they are intangible and it is
difficult to measure their value
accurately
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98. Reviewing the Facts (cont.)
Distinguish between product
markets and factor markets.
Product markets are producers
offering goods and services for sale.
Factor markets are productive
resources being bought and sold.
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to display the answer.

99. Reviewing the Facts (cont.)
Explain why economists argue that
productivity is important.
Productivity is the efficient use of
productive resources. The more
efficiently productive resources are
used, the greater the number of
goods and services that are
produced.
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to display the answer.

100. Reviewing the Facts (cont.)
Describe the nature of an
opportunity cost.
the cost of the next best alternative
use of money, time, or resources
when one choice is made rather than
another
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101. Reviewing the Facts (cont.)
Identify the economic concept
illustrated by the production
possibilities frontier.
opportunity cost
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102. Reviewing the Facts (cont.)
Describe incremental decision
making.
making a decision in small stages or
steps so that the decision can be
reversed without too much being lost
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103. Reviewing the Facts (cont.)
Explain why economic education is
important.
It helps people become better
decision makers.
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104. Thinking Critically
Understanding Cause and Effect Suppose
that Alpha, shown in Figure 1.6 on page 23,
decided to produce more guns and less
butter. What would Alpha have to do to
make the change? What would be the
opportunity cost of producing more guns?
What conditions would have to be met for
the new mix of guns and butter to be on the
production possibilities frontier?
Resources have to be shifted from guns to
butter. The opportunity cost of producing
more guns is the production of less butter. All
of Alpha’s resources would have to be
employed.
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to display the answer.

105. Thinking Critically (cont.)
Understanding Cause and Effect
Copy the two diagrams of the
production possibilities frontiers
shown shown on page 29 of your
textbook. Then, write captions that
explain what each diagram is
showing.
The diagram on the left shows
increase in productivity/resources in
gun industry; the diagram on the right
shows increase in resources/
productivity in butter industry.
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to display the answer.

106. Applying Economic Skills
Scarcity What three choices must a
society make because of scarcity?
WHAT to produce? HOW to produce?
FOR WHOM to produce?
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to display the answer.

107. Applying Economic Skills (cont.)
Utility How is a product’s utility
related to its value?
For a product to have value, it must
have utility.
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to display the answer.

108. Applying Economic Skills (cont.)
Cost-Benefit Analysis How would
you apply the concept of costbenefit analysis to the decision to
finish high school? To further your
education?
Make a matrix listing choices and the
costs and benefits (including time,
money, and satisfaction) of each
educational choice.
Click the mouse button or press the Space Bar
to display the answer.

109. Suppose that scientists invented a car that
ran efficiently on water. Explain, in terms
of scarcity, how this might affect the price
of water. Explain, in terms of utility, how
this might affect the price of gasoline.
The more water that is needed, the scarcer it
becomes, and so the price of water might go
up. The less gasoline that is needed, the less
utility it has, and so the price of gasoline
might go down.
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to display the answer.

110. Click the mouse button to return to the Contents slide.

112. Continued on next slide.

114. Continued on next slide.

116. Continued on next slide.

118. Create a television-viewing log chronicling the
number and types of economics-related items
presented on the nightly news. Watch national
newscasts on the networks, CNN national
newscasts, and local newscasts. Record the
date, the subject of the item, and the length of
time devoted to the item.

119. Explore online information about the
topics introduced in this chapter.
Click on the Connect button to launch your browser and go to
the Economics: Principles and Practices Web site. At this site,
you will find interactive activities, current events information,
and Web sites correlated with the chapters and units in the
textbook. When you finish exploring, exit the browser program
to return to this presentation. If you experience difficulty
connecting to the Web site, manually launch your Web browser
and go to
http://epp.glencoe.com/sec/socialstudies/economics/econ
principles2005/index.php

120. Explore online information about the
topics introduced in this chapter.
Click on the Connect button to launch your browser and go to the
BusinessWeek Web site. At this site, you will find up-to-date
information dealing with all aspects of economics. When you
finish exploring, exit the browser program to return to this
presentation. If you experience difficulty connecting to the Web
site, manually launch your Web browser and go to
http://www.businessweek.com

121. Durable Goods Orders The Department of
Commerce’s report on durable goods orders highlights
the number of new orders placed with domestic
manufacturers for good intended to last over three
years. The report is divided into broad categories; these
include defense, nondefense, and capital and noncapital
goods. Noncapital goods are generally of the consumer
spending variety and include automobiles and large
appliances. Capital goods tend to be of the investment
spending nature, while defense goods indicate
government spending.

122. United States Leads in Entrepreneurs Just as students
in the United States participate in programs on
entrepreneurship, students in other countries study the
same principles. In Ireland, students aged 12 to 18 can
be part of the Young Entrepreneurs Programme. The
purpose of the program is to encourage students to learn
about starting their own businesses. Students sometimes
sell their products or services to other students and
sometimes to the general public. During the 1996–1997
school year, more than 7,000 students in 250 schools
took part in the program, starting about 2,300
businesses.

123. Wealth in Other Cultures Personal wealth has
been viewed in a variety of different ways in
cultures around the world. In the past, the
camel, an animal indispensable for journeys
across desert regions, was a highly prized
possession in many Arab countries. Wealth and
social standing were measured, in part, by the
number of camels a person owned.

124. The term conspicuous consumption–which
means the use of a good or service to
impress others–was coined by economist
and social critic Thorstein Veblen in his study
The Theory of the Leisure Class (1899).

125. Stock Trading One area of economic activity
that computers and the Internet have
revolutionized is stock trading. For certain stocks,
traders no longer have to use a stockbroker to
buy or sell stock. Instead, using computers, they
can trade directly with one another. They also
use certain software programs to help them
analyze stocks. Using a number of sites on the
Internet, traders can keep track of stocks as they
are being bought and sold, and keep track of the
buyers and sellers as well.

126. The Role of the
Entrepreneur
Alexis de Tocqueville, a French traveler, wrote
about his travels in the United States during the
1830s. His book, Democracy in America, a twovolume study of the American people and their
institutions, is still relevant today.
Read the BusinessWeek Newsclip article on
page 11 of your textbook. Learn why Democracy
in America is still relevant today.
Continued on next slide.
This feature is found on page 11 of your textbook. Click
the Speaker button to listen to an audio introduction.

127. The Role of the
Entrepreneur
Summarizing Information What are
the entrepreneurial qualities of small
companies?
They are nimble, innovative, close to the
customer, and quick to the market.
Continued on next slide.
Click the mouse button or press the Space Bar to display the
answer. This feature is found on page 11 of your textbook.

128. The Role of the
Entrepreneur
Finding the Main Idea What does the
writer mean by “diseconomies of
scale”?
The writer is referring to the slowness to
change and the high costs that can result
when companies become too large.
Click the mouse button or press the Space Bar to display the
answer. This feature is found on page 11 of your textbook.

129. What Is Economics?
Your Role As A Consumer
Click on a hyperlink to choose that topic.

130. Economics and You
Video 2: What Is Economics?
After viewing What Is Economics?, you should be able
to: 
•
•
•
•
Define economics. 
Give an example of economic scarcity. 
Distinguish between needs and wants. 
Discuss the trade-offs involved in allocating scarce resources.
Continued on next slide.
Click the mouse button or press the Space Bar
to display the information.

131. Economics and You
Video 2: What Is Economics?
Side 1
Disc 1
Chapter 2
Click the Videodisc button
anytime throughout this
section to play the complete
video if you have a videodisc
player attached to your
computer.
Click the Forward button to
view the discussion questions
and other related slides.
Click inside the box to play the preview.
Continued on next slide.

132. Economics and You
Video 2: What Is Economics?
What is economic scarcity?
Economic scarcity occurs when
available resources are not
sufficiently abundant to satisfy the
total demand for them.
Side 1
Disc 1
Chapter 2
Click the mouse button or press the Space Bar to display the
answer.

133. Economics and You
Video 9: Your Role As A
Consumer
After viewing Your Role As A Consumer, you
should be able to: 
• Compare and contrast disposable and discretionary income.
• Identify aspects of wise consumer decision making. 
• Describe some federal consumer protection activities.

Continued on next slide.
Click the mouse button or press the Space Bar to display the
information.

134. Economics and You
Video 9: Your Role As A
Consumer
Side 1
Disc 1
Chapter 9
Click the Videodisc button
anytime throughout this
section to play the complete
video if you have a videodisc
player attached to your
computer.
Click the Forward button to
view the discussion questions
and other related slides.
Click inside the box to play the preview.
Continued on next slide.

135. Economics and You
Video 9: Your Role As A
Consumer
What is the difference between
disposable income and discretionary
income?
Disposable income is the money
left after taxes that is spent on
basics. Discretionary income is
the money left over for
nonessentials.
Click the mouse button or press the Space Bar to display the
answer.
Side 1
Disc 1
Chapter 9

136. Sequencing and
Categorizing Information
Sequencing involves placing facts in the
order in which they occur. Categorizing
entails organizing information into groups of
related facts and ideas. Both actions help you
deal with large quantities of information in an
understandable way.
Continued on next slide.
This feature is found on page 26 of your textbook.

137. Sequencing and
Categorizing Information
Learning the Skill
• Look for dates or clue words that provide you with a
chronological order: in 2004, the late 1990s, first,
then, finally, and so on. 
• If the information does not happen in sequence,
you may categorize it instead. To do so, look for
information with similar characteristics. 
• List these characteristics, or categories, as the
headings on a chart.
Continued on next slide.
Click the mouse button or press the Space Bar to display the
information. This feature is found on page 26 of your textbook.

138. Sequencing and
Categorizing Information
Learning the Skill (cont.)
• As you read, fill in details under the proper category
on the chart.
Continued on next slide.
This feature is found on page 26 of your textbook.

139. Sequencing and
Categorizing Information
Practicing the Skill
• Read the excerpts on page 26 of your textbook,
compare the information they contain, then answer
the questions on the following slides.
Continued on next slide.
This feature is found on page 26 of your textbook.

140. Sequencing and
Categorizing Information
Which passage’s information can be
organized sequentially? List the main ideas
in chronological order.
Excerpt A; the U.S. dominated the world steel
market (1950s, 1960s), foreign competition cut
into U.S. dominance (1980s), U.S. steel
production improved (1990), work-hours
required to produce a ton of steel dropped in
the U.S. (1990), beginning in 1947 trade
agreements protected U.S. jobs. Continued on next slide.
Click the mouse button or press the Space Bar to display the
answer. This feature is found on page 26 of your textbook.

141. Sequencing and
Categorizing Information
What categories can you use to
organize the information in the other
excerpt?
Answers will vary.
Click the mouse button or press the Space Bar to display the
answer. This feature is found on page 26 of your textbook.

142. Adam Smith
1723–1790
Click the picture to learn
more about Adam Smith.
Be prepared to answer the
questions that appear on
the next two slides.
Continued on next slide.
This feature is found on page 18 of your textbook.

143. Adam Smith
1723–1790
Summarizing Ideas Summarize Smith’s
contribution to economic thought.
Answers will vary.
Continued on next slide.
Click the mouse button or press the Space Bar to display the
answer. This feature is found on page 18 of your textbook.

144. Adam Smith
1723–1790
Synthesizing Information Explain how
Smith’s ideas are evident in the
workings of the American economy.
The United States has a market economy,
composed of a myriad of small markets,
each of which operates essentially in the
way Smith described; buyers and sellers
operate in their own best interests.
Click the mouse button or press the Space Bar to display the
answer. This feature is found on page 18 of your textbook.

145. End of Custom Shows
WARNING! Do Not Remove
This slide is intentionally blank and is set to auto-advance to end custom
shows and return to the main presentation.

146. Click the mouse button to return to the Contents slide.