What is Economics? Economics studies the Production, Consumption, and Distribution of _____________ goods and services for a society with __________ wants and _________. scarce unlimited needs

What is Economics? Basic questions answered by an economic system –Production (what is produced) ________________ (things used to make goods and provide services)- Tools, Natural Resources, Human Resources) ___________ (What are the needs or wants) –Consumption (how much is produced) ______________ _____________ Resources Demand Resources Demand

What is Economics? Basic questions answered by an economic system –How are goods produced? Capital- ____________ to get started and ______________ needed to make product ______ and _________ Resources- materials to make good and energy to support production ____________- Workers _____________- People who plan and supervise the production money equipment LandNatural Labor Management

What is Economics? Basic questions answered by an economic system –Distribution (for whom are the goods produced) Marketing –Getting the product to the ______________ –Advertising –Selling –______________ consumer Storage

Scarcity Limited supply of resources –Requires trade-offs or ____________ What you don’t choose, in favor of something else choice

Opportunity Costs/Incentives Limited supply of resources –____________ costs The ________ value of the good or activity you ________ in favor of something else –Incentives ___________ the selection/trade-off Opportunity highest Gave up Influence

Economic systems Free Market (buying/selling) Economy –Individual _______________ People have the freedom to _________ the product they want –________ sovereignty the individual consumer make economic _________________ (buy/sell/produce) –_______________ people to start businesses to make ________ Choice choose Consumer decisions Profit profit

Economic systems Free Market Economy (cont) –_______________ Businesses are free to _________________ with others –________ ownership of property/resources Individuals _________ the means of production Competition compete Private own

Economic systems Command Economy –Centrally planned economy Government makes ____ economic decisions Decides what, how many, how, and who gets it –Central ownership of property/resources __________________ provides necessary raw materials, money, and labor –Lack of consumer choice The ___________________has little influence in economic decisions all Government individual

Economic systems Command Economy –Pros Government can set the _________ of goods Consumers are assured ___________ when they are available –Cons No _______________ No ____________ Goods may be ___________ made Individuals have little economic ___________. They must _______ where the government tells them. prices goods competition choice poorly freedom work

Economic systems Mixed Market Economy –Most ___________ economic system in the world –____________ and ____________ act as decision makers in the private sector –______________ acts as the decision maker in the public sector Areas such as roads, mail, water, police, military common IndividualsBusinesses Government

Economic systems Mixed Market Economy (cont.) –___________ government role than in the Free Market Economy Government monitors to prevent businesses from cheating or abusing workers and consumers, making sure products are safe, protecting the environment –______________ –__________ and ____________ Greater Incentives Supply Demand

Entrepreneurs People who start new ____________ ____________ their ________ and _______ to build a _________ business __________- Reward of success businesses Riskmoney time profitable Profit

Forms of Business Organization Sole Proprietorship –______ owner who ___________ the business, income, assets, and risks. Usually _________ businesses (restaurant, beauty parlor, gas station) –Pro- You’re the ______. Get to decide what to do, ______, charge, make or _____, hours to work –Con- You take all the _______. You provide all the _________, pay the bills, hire and fire. If the business fails you lose ______ you put into it. Onecontrols small boss buysell risks money all

Forms of Business Organization Partnership –Business which _______ or more people own. –Pro People can pool their ______________ if they don’t have enough individually Can ___________ different skills, share the workload, duties and decisions –Con If business fails each partner is ____________ for the ____________ amount of the loss __________________ between partners. May have to be solved in __________ two Money/capital combine responsible total Disagreements court

Forms of Business Organization Corporation –A large business that has many ________. –A corporation is treated as an __________. –Sells shares of ownership called __________. –People who buy shares are called _________________. –Stockholders _____________ in company profits and risks. owners individual stock shareholders share

Forms of Business Organization Corporations –Pro Many people/shareholders ________ the risk Limited _________- Shareholders only risk the money they ________. They are not responsible for all the ___________ of the corporation. Shareholders have a say in how the business is run __________ their shares. The more shares you own the more ____________ you have –Con May _________ the money you invested share liability debt invest By voting votes lose

Supply/Demand/Price The interaction of __________ and ____________ determines _________ __________ determines who ________ goods and services Supply high-price ___________ Supply low-price __________ Many producers-price _________ Few producers-price _________ supply demand price Priceacquires low high low high

Supply/Demand/Price Demand high- Price _________ Demand low- Price ________ high low

Business Cycle General prosperity. People buying Goods. Businesses hiring and producing More goods and services. Boom period. Economy peaking. Businesses working at full capacity Economy starting to slow down. People buying less. Businesses cutting back. Recession. Production at low point. High unemployment. Reduced spending on goods.

Inflation ____ money in the economy than there are goods and services to spend it on Increased demand causes _____ to rise Increased prices due to this is called __________ __________ the buying power of the people’s money Hurts people on a _________ income More prices inflation Reduces fixed

INFLATION-ADJUSTED PRICE YEARPRICE PER GALLONINFLATION-ADJUSTED PRICE