1. Chapter 2, Lesson 2 Exploring Economics

2. It Matters Because Most people in our society buy or sell goods and services every day. Trade has also shaped the course of history in major ways.

3. What is Economics? Three Key Questions: 1.What goods and services should we offer? 2.How should we create and distribute these goods and services? 3.Who will use these goods and services?

4. Resources and Production Goods & services require resources. Four major types: 1.Land – land includes property, and the natural resources within For example: 2.Labor – ability of people to do work Where does labor come from? 3.Capital – money and goods used to produce goods and services How is capital raised? 4.Entrepreneurship – willingness to run a business and take risk What risks?

5. Technology A fifth resource is technology. Technology = applied knowledge to accomplish a task or make a task simpler Examples of technology in: – 2014? – 2000? – 1950? – 1900? – 1800?

6. Supply and Demand Supply – amount of a good or service available Demand – amount of a good or service desired Analyze supply and demand. At what point would the cost of a good or service be at its highest? Its lowest? Scarcity also affects cost. How? Opportunity cost refers to what someone must give up in order to make or buy a good or service For example?

7. Managing and Measuring Economies Traditional economy – based on custom. Children often do the same work as parents before them. Common possession is common. Bartering is common. Command economy – central government decides what goods and services are produced and who will receive them. Market economy – individuals make choices of what to produce, sell, and buy. Trade occurs in open market. What is an open market? Mixed economy – blend of command and market.

8. Measuring Economies Economies grow and shrink over time Growth is called an economic boom Recession - the economy does not grow or even shrinks Inflation – goods and services cost more, so money buys less

9. Why do people trade? Countries trade with one another to gain goods they cannot or do not produce. Export – goods shipped out of a country and sold somewhere else Import – goods brought into a country from somewhere else Barter – trading goods and services for other goods and services

10. Advancement in Trade Money was invented to have a known value and be easy to carry What are some barriers to trade?