Warm-up What makes something valuable?

Economic Systems Barter System – goods and services are exchanged for other goods and services; no money is involved Free Market Economy– government has little or no involvement with the economy; money is involved Command Economy – the government plays a large role with the economy; money is involved

Supply and Demand What is Supply and Demand? –Supply: What a producer can provide to sell –Demand: The amount of a product that people want to buy How can the buyer and seller both be happy? –They need to find the middle ground, also known as equilibrium.

What is supply? The Law of Supply- Quantity supplied is directly proportional to price. Consumers want to pay as little as they can. They will buy more as the price drops. Sellers, on the other hand, want to be able to charge as much as they can. They will be willing to make more and sell more as the price goes up. This way they can maximize profits.

A Supply Curve Price of Baseballs Number of Baseballs Sellers Want to Sell $ $ $ $

What is demand? Demand is comprised of three things. Desire Ability to pay Willingness to pay The Law of Demand: Simply put, the higher the price, the lower the demand and the lower the price, the higher the demand.

A Demand Curve Price of Baseballs Number of Baseballs People Want to Buy $ $ $ $4.0040

Supply and Demand Together at Last Price of Baseballs Number of Baseballs People Want to Buy Number of Baseballs Sellers Want to Sell $ $ $ $

Productivity A society is most productive if people specialize and do a job that they can do better than everybody else. Example: Tall people should pick coconuts and short people should pick carrots.

Opportunity Cost Example: If you spend time and money going to a movie, you cannot spend that time at home reading a book, and you cannot spend the money on something else. If your next-best alternative to seeing the movie is reading the book, then the opportunity cost of seeing the movie is the money spent plus the pleasure you forgo by not reading the book. Definition: the value of the next-highest-valued alternative use of that resource.

Inflation Inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.price leveleconomy When the price level rises, each unit of currency buys fewer goods and services. currency Inflation reflects a reduction in the purchasing power per unit of money purchasing power

Inflation (continued) Inflation - Period of rapidly increasing prices. Money is less valuable.

Sales Tax - money added to the cost of an item or service. Usually a percentage of the price charged. Tariff – a tax on imports - products Loss/ debt - money that is spent and that is more than the amount earned or received

Credit - buying something now without having the money, with the promise to pay for it later with interest. Interest – fee for using credit. Usually a percentage of the total amount borrowed. EX: %

Explain the role of taxes in economic production and distribution of resources (PFL) (DOK 1-2)

Define the various types of taxes you will pay as adults (PFL) (DOK 1)

Demonstrate the impact of taxes on individual income and spending (PFL) (DOK 1-2)