1. What is an Economy?
Chapter 13

2. People’s Wants and Needs
Basic Survival Needs:
Food
Clothing
Shelter
What are our wants?

3. Using Resources
Factors of Production- the resources people have for producing goods and services to satisfy their wants
Labor- human resource that will turn raw materials into consumer good
Land- natural resources needed
Capital- monetary resources and physical assists companies or individuals use to produce good
Entrepreneurship- want or desire to start business

4. Production of Consumption
To produce the goods and services people want, the resources of labor, land, and capital must be combined in a process called production
Consumption- is the act of buying or using goods or services

5. Steps of Want-Satisfaction Chain
Human wants
Require people to combine resources of land, labor, and capital
Production
Which results in goods and services
Distribution
Consumption
Which results in want satisfaction

6. Making Choices
There are never enough resources to produce all the goods and services people want
People in all societies must make choices about which of their wants will be satisfied and which will not
Opportunity cost- the highest valued benefit given up when a choice is made
Scarcity- resources are always limited compared with the number and variety of wants people have

7. Three Most Basic Economic Decisions
Which goods and services should be produced, and in what amounts?
How should these goods and services be produced?
Who will get the goods and services that are produced?

8. What and How Much?
In any economy, people must decide what to produce with the scare resources they have
Quantity- amount to produce

9. How to Produce Goods and Services
New inventions and innovation in technology have had a major impact on the decisions that people make about how to produce goods and provide services
Technology- the practical application of science to commerce or industry

10. Who Gets What?
People must find a way to decide how all the goods and services will be divided up
Wants are always greater than the resources available to satisfy them
The goals and values of a society have a great influence on how that society makes all three basic economic decisions