1. Splash Screen

2. Chapter Menu Chapter Introduction Section 1:Section 1:How Economic Systems Work Section 2:Section 2:Making Economic Decisions Visual Summary

3. Chapter Intro 1 As American citizens, we live in a land of economic opportunity. Our economy provides us with a great variety of jobs, goods, and services. The United States has a free enterprise system under which consumers and producers make the major economic decisions. We can contribute to the nation’s economic success by taking advantage of economic opportunities.

4. Chapter Intro 2 Section 1: How Economic Systems Work An economic system is the way a society organizes the production and consumption of goods and services. Economics is the study of how we make decisions in a world in which resources are limited as well as the study of how things are made, bought, sold, and used.

5. Chapter Intro 2 Section 2: Making Economic Decisions An economic system is the way a society organizes the production and consumption of goods and services. Economic decision making requires us to understand all the different costs and all the benefits of a choice.

6. Chapter Preview-End

7. Section 1-Main Idea Guide to Reading Big Idea An economic system is the way a society organizes the production and consumption of goods and services.

8. Section 1-Key Terms Guide to Reading Content Vocabulary need want economics microeconomics macroeconomics economic model economic system resource scarcity

9. Section 1-Key Terms Guide to Reading Academic Vocabulary rational capable generate

10. A.A B.B Section 1-Polling Question Do you agree that understanding economics is an important responsibility of all citizens? A.Agree B.Disagree

11. Section 1 Economic Choices Economics is the study of how we make decisions in a world in which resources are limited as well as the study of how things are made, bought, sold, and used

12. Section 1 Economic Choices (cont.) Citizens must make economic choices every day. Needs and Wants: –Needs are required, such as food and shelterNeeds –Wants make life more comfortable and enjoyable, like vacationsWants –Choices occur because resources cannot meet all wants and needs.

13. Section 1 Economics:Economics –Studies decisions made in a world of limited resources –Studies how things are made, bought, sold, and used Economic Choices (cont.)

14. Section 1 Economic models include microeconomics and macroeconomicsEconomic models microeconomicsmacroeconomics –Microeconomics focuses on the small pictureMicroeconomics –Macroeconomics focuses on the big pictureMacroeconomics Economic Choices (cont.) United States functions on free enterprise capitalism

15. A.A B.B C.C D.D Section 1 Which of the following economic choices would you be more likely to make? A.buying a CD B.paying for math tutoring C.saving money in a bank D.buying an expensive meal

16. Section 1 The Problem of Scarcity The limits on, or scarcity of, resources forces people to make careful economic choices.

17. Section 1 The Problem of Scarcity (cont.) A scarcity of resources forces people to make economic decisions.scarcityresources No country has enough resources to produce all necessary goods and services. Choices All Societies Face

18. Section 1 Countries have choices: –What to produce must balance needs –How to produce must balance problems and benefits –For whom to produce and how to distribute The Problem of Scarcity (cont.)

19. A.A B.B Section 1 Do you agree that when resources are limited, choosing to produce weapons for defense over improving facilities for those who are too old or sick to work is acceptable? A.Agree B.Disagree

20. Section 1-End

21. Section 2-Main Idea Guide to Reading Big Idea An economic system is the way a society organizes the production and consumption of goods and services.

22. Section 2-Key Terms Guide to Reading Content Vocabulary trade-off opportunity costopportunity cost marginal cost marginal benefit cost-benefit analysiscost-benefit analysis Academic Vocabulary previous compute diminish

23. A.A B.B Section 2-Polling Question Have you ever had to give up one thing you wanted in order to get another? Was the choice worth it? A.Yes B.No

24. Section 2 Trade-Offs Economic decision making requires us to understand all the costs and all the benefits of a choice.

25. Section 2 Trade-Offs (cont.) People must understand the costs and benefits of economic choices in order to best make those choices. A trade-off requires someone to decide to do one thing rather than anothertrade-off –Individuals make trade-offs –Trade-offs made on larger scales— families, businesses, societies

26. Section 2 Opportunity cost is second best use of time or money after choosing one thing over anotherOpportunity cost –Includes money, time, inconveniences, and so on Trade-Offs (cont.)

27. A.A B.B Section 2 Do you agree that almost all decisions involve trade-offs? A.Agree B.Disagree

28. Section 2 Costs and Revenues Economists have developed ways of measuring different types of costs and revenues.

29. Section 2 Costs and Revenues (cont.) There are ways to measure different types of costs and benefits. Types of Costs: –Fixed costs—do not change, have to be paid –Variable costs—change based on what is produced

30. Section 2 Costs and Revenues (cont.) –Total costs—both fixed costs and variable costs –Marginal cost—cost of producing one additional unit of outputMarginal cost

31. Section 2 Types of Revenue: −Total revenue equals number of units sold multiplied by average price per unit −Marginal revenue—revenue made by selling one extra unit of a product Costs and Revenues (cont.)

32. Section 2 Marginal benefit—an additional benefit associated with an actionMarginal benefit Cost-benefit analysis requires rational economic decision makingCost-benefit analysis Costs and Revenues (cont.) –Considers the benefits of making a choice over the costs Cost-Benefit Analysis

33. A.A B.B Section 2 Do you think the benefits of your decisions usually outweigh the costs? A.Yes B.No

34. Section 2-End

35. VS 1 Economics Economics is the study of how we make decisions in a world in which resources are limited. Microeconomics deals with decision making by small units such as individuals and firms. Macroeconomics deals with the economy as a whole and decision making by large units such as government.

36. VS 2 Making Economic Decisions What to produce How to produce For whom to produce Individuals satisfy their unlimited wants in a world of limited resources by making choices. The need to make choices arises because of scarcity, the basic problem in economics. Every society must answer the three basic economic questions:

37. VS 2 Making Economic Decisions Individuals are forced to make trade-offs every time they use their resources in one way and not in another. The cost of making a trade-off is known as opportunity cost—the value of the next best alternative that has to be given up to do the action that is chosen.

38. VS 3 Costs and Revenue Four important measures of cost are total cost, fixed cost, variable cost, and marginal cost. A key measure of revenue is marginal revenue, which is the change in total revenue when one more unit of output is sold.

39. VS 4 Economic Systems Every type of economic system must answer the three basic economic questions. The United States has a free enterprise, or capitalist, economic system.

40. VS-End

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46. Vocab1 needs requirements for survival, such as food, clothing, and shelter

47. Vocab2 wants things we would like to have, such as entertainment, vacations, and items that make life comfortable and enjoyable

48. Vocab3 economics the study of how individuals and nations make choices about ways to use scarce resources to fulfill their needs and wants

49. Vocab4 microeconomics the economic behavior and decision- making by individuals and small businesses

50. Vocab5 macroeconomics economic behavior and decision- making by government or whole industries or societies

51. Vocab6 economic model simplified representation of the real world that economists develop to describe how the economy behaves and is expected to perform in the future

52. Vocab7 economic system nation’s way of producing things its people want and need

53. Vocab8 resource the money, people, and materials available to accomplish a community’s goals; wealth

54. Vocab9 scarcity not having enough resources to produce all of the things we would like to have

55. Vocab10 rational reasonable

56. Vocab11 capable having ability or competence

57. Vocab12 generate to bring into existence

58. Vocab13 trade-off the alternative you face if you decide to do one thing rather than another

59. Vocab14 opportunity cost the cost of the next best alternative use of time and money when choosing to do one thing rather than another

60. Vocab15 marginal cost the additional or extra opportunity cost associated with an action

61. Vocab16 marginal benefit the additional or extra benefit associated with an action

62. Vocab17 cost-benefit analysis economic model that compares the marginal costs and marginal benefits of a decision

63. Vocab18 previous coming before or prior

64. Vocab19 compute to determine or calculate

65. Vocab20 diminish to lessen or reduce

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