1. WHAT IS ECONOMICS? ECONOMICS IS THE STUDY OF HOW WE MAKE DECISIONS IN A WORLD WHERE RESOURCES ARE LIMITED. THERE ARE THREE QUESTIONS THAT WE MUST ASK WHEN WE ARE DEALING WITH ECONOMICS. THEY ARE: 1. WHAT DO WE PRODUCE? 2. HOW SHOULD WE PRODUCE? 3. WHOM SHOULD WE PRODUCE FOR?

2. 1. What do we produce? We produce items in the United States and around the world for individuals to use and have. There are two major types of things we produce for: 1. Needs: Things we need in order to survive such as food and water. 2. Wants: Things we would like to have such as a nice car and a big house.

3. Scarcity Occurs when we do not have enough resources to produce all the things we would like to have Cars- we have to rely on other countries to help supply cars: Japan, Germany Education, National Defense, Clothes Some people will begin to compare prices and see what they can afford such as a big car or a small car, rent a house or buy a house

4. How should we produce? Businesses like to produce items as cheap as possible. Is it ok to drill in a wildlife sanctuary to get more oil of we need it? Another question would be where to produce? Businesses are always looking for more land to build on and seeing how much production they can achieve. Should we allow pollution if we know the company will produce a lot of items at a very cheap price?

5. Whom should we produce for? Who will get those new cars? Who benefits from a new school? Most of the goods and services in the United States are distributed through a price system.

6. Producers: People who work in the factories and produce the actual goods that are going to be used by society Consumers: Those individuals that are actually using the goods that are produced by the producers.

7. Producing Goods and Services Goods: Tangible products such as boots and automobiles that we use to satisfy our needs and wants. Services: Work that is performed by someone else: include haircuts, home repairs, and forms of entertainment