Economics

Economics A system that includes all of the activities that people and businesses do to earn a living.

Economic Activities Primary – Raw Materials Secondary – Using the raw materials to make something Tertiary – Sell those things that were made/provide services Quaternary – Don’t work with goods, but information

Types of Economies Traditional – a system in which people grow their own food and make their own goods. Market – a system based on private ownership, free trade and competition Capitalism Command – a system in which the central government makes all economic decisions

Study of Economics The study of how resources are used to satisfy people’s wants and needs The study of people trying to get all the things they want and having to decide what they want the most

Wants and Needs Want: things that we wish for but could survive without Needs: Things that are necessary for our survival Both Wants and Needs can be satisfied by consuming a good or a service

Goods and Services Goods: objects that satisfy people’s wants, something that you can hold in your hand or touch Services: activities that satisfy people’s wants

Interdependence When people rely or depend upon each other for help or resources in accomplishing production I need you, you need me!

Marketplace Anywhere there is an exchange of a good or a service between a producer and a consumer

Producer and Consumers Producer: People who make a product to sell to consumers Consumer: people who buy and use the goods to satisfy wants

Money Anything commonly used as a medium of exchange Throughout history gold and silver have been the most common types of money Today currency and checking accounts are used as money

Capital Resources The tools and machines that help in producing the product

Human Resources The people who put energy and time towards producing the product and getting it to market.

Natural Resources “Gifts of Nature” (Soils, Air, Water, Plants, Minerals, Animals, Etc.) They are present without human intervention

Overhead or Input All of the resources that go into the production of a good

Productivity The amount of output per unit or input The cost is directly related to the productivity

Productive Resources or Output The finished product Natural resources (land), Human Resources (labor), and the Capital Resources (Machines) are all needed in the production of a good

Advertising How to make the public aware of what good or service you are selling. CANDY!!

Specialization When someone does a particular job in the production process

Scarcity Takes place when there is not enough to go around to meet every ones wants and needs Requires people to make choices about using goods and services

Supply and Demand Market force that explains why items become scarce or cost more Supply: How much is available Demand: How much is needed

To much Supply and not enough Demand, prices go down

Too much Demand and not enough Supply, prices go up.

Opportunity Cost When you choose between two things, the one you give up is your opportunity cost.