Study Guide Essential Questions Economy Study Guide Essential Questions

#1 What is the difference between a primary and a secondary product? Primary = raw material from the earth Secondary = goods made from raw materials

#2 What is the difference between a good and a service? Goods = things I can buy (tangible) Services = jobs that I pay someone to do for me

Scarcity causes global trade You’ve got what I need! #3 What is the cause of global trade? How do countries decide who to trade with? Scarcity causes global trade You’ve got what I need!

#4 What is scarcity? Lack of sufficient resources Not enough of something to go around

#5 What is the difference between an import and an export? Import = bring goods and resources IN Export = send goods and resources OUT Countries export what they in surplus (extra) Countries import resources that are scarce.

#6 What is the difference between supply and demand? Supply = How many there are. Demand = How badly people want it.

#7 How do supply and demand affect price? Price follows demand If demand is high I can raise the price. If demand is low, I can lower the price. If price is too high, demand can drop If price is too low demand will increase but supply will run out.

#8 What is a positive effect of competition? Competition is GOOD for the consumer Higher Quality Lower Prices

#9 What is a negative effect of competition? Competition can be less beneficial for the seller. Lower prices = lower income/profit Harder for the seller to make a higher quality product.

http://www.imf.org/external/np/exr/center/ students/trade/