1 Economic Decisions and Systems 1-1 Satisfying Needs and Wants C H A P T E R 1 Economic Decisions and Systems 1-1 Satisfying Needs and Wants 1-2 Economic Choices 1-3 Economic Systems 1-4 Supply and Demand

Checkpoint  What is the difference between a need and a want? Needs are those things required to live, such as food, clothing, and shelter. Wants are things that add comfort and pleasure to our lives such as television, music CDs, and movies.

NEEDS AND WANTS Needs are essential (Necessary Products) Wants add to the quality of life (Luxury Products) Needs and wants are unlimited Resources are limited

GOODS vs SERVICES A Good is a tangible product EX: Phone A Service is an intangible act EX: Education Economic Resources- The factors of production it takes to create a product

Checkpoint  What are the three types of economic resources? Give an example of each type. Natural: water, land, trees, animals, and minerals. Human: labor (people who run farms and factories, transport goods, provide services, or manage businesses). Capital: money, land, buildings, tools, and equipment.

THE BASIC ECONOMIC PROBLEM Scarcity- Unlimited wants & needs but limited resources Economic decision making: Choices Trade-offs- losing one idea to pursue another Opportunity cost is the value of the next best alternative that you don’t choose.

THE DECISION-MAKING PROCESS 1. Define the problem. 2. Identify the choices. 3. Evaluate the advantages and disadvantages of each choice. 4. Choose one. 5. Act on your choice. 6. Review your decision.

THE THREE ECONOMIC QUESTIONS What to produce? How to produce? What needs and wants to satisfy?

TYPES OF ECONOMIC SYSTEMS (How a society chooses to use resources) Command economy- controlled by government Market economy- controlled by supply and demand Traditional economy- Older concept in under- developed countries (rely on natural resources) Mixed economies- a balance of government controlled and free-market

Capitalism- Private ownership People own businesses not government Name the four principles of the U.S. economic system. Private property – owned by individual, not business Freedom of choice- free to make business decisions Profit- Revenue minus Expenses Competition- No monopolies, free to compete

PARTICIPATING IN A MARKET ECONOMY Consumers set demand (the buyer or user) (the want or need for a product) Producers establish supply (the creator, seller) (the inventory of a product)

Checkpoint  How does the price of a product affect demand and supply? As prices decrease, the number of consumers willing and able to purchase the product (demand) will increase. As prices increase, businesses will be willing to supply larger quantities of the product.

Checkpoint  How is the market price for a product determined? Supply, demand, and competition determine the market price for a product or service. The market price is the point at which supply and demand are equal.

ONLINE RESEARCH- NEW PRODUCTS Find and record information on 2 new products that have been introduced to the market within the last 6 months. Record this information on your worksheet, find 2 products that you think will be successful.