2. Production is what and how many goods and services to make. Businesses decide what things or services they think people will buy and provide them. They make these things or services and attempt to sell them to the consumers.

3. A. Capital – human-made things used for production (tools, machinery, money) B. Land – natural resources used for production (water, timber, materials) C. Labor – human work effort used for production These 3 things are called resources.

4.  The 3 resources needed for production are limited.  Each society has a limited amount of all 3.  Companies must use their resources wisely.

5. Consumption is the purchase and use of a good or service. Consumers are people with money. They decide what things or services they need and buy them.

6. The amount of a good or service available is the supply. The amount of a good or service people are willing to buy is the demand.

7. If SUPPLY is great and DEMAND is low prices are LOW. (you have more items than people want so you can’t charge a high price for them) If SUPPLY is low and DEMAND is great prices are HIGH. (you don’t have enough items for everyone so you can charge a high price for them)

8. Distribution is how to move goods and services to consumers. Suppliers must decide how to get goods and services to the people. They may use different ways. The type of good or service, the location of the consumer, and the cost of transportation will affect what is used.

9. 1. You make ice cream in Georgia and you want to get it to Florida. What would you use? __________________________________ Why?__________________________________________________________________________ 2. You make TVs in Ohio and you want to send them to a store in Asia. What would you use?_______________________________ Why?___________________________________________________________________________ 3. You make huge x-ray machines in Alabama and you want to get one to a hospital in Georgia. What would you use?_________________________ Why?__________________________________________________________________________ 4. You make candles in New Mexico and you want to get them to a store in New York. What would you use?___________________ Why?__________________________________________________________________________ 5. You make medicine for snake bites in Texas and you need to get a dose to a dying man in Montana. What would you use?_______________________________________ Why?__________________________________________________________________________ Word Bank: Plane TrainSemi-truck (big) Refrigerated Truck Boat