1. p. 1 Being an Economically Smart Citizen I. Understanding Your Role in the Economy A. The U.S. has a ____________Economy 1. most economic decisions made by individuals looking out for _________________________. a. ____________ gov’t interference 2. is ____________ a. the ____________ you make as a consumer affects the products made and prices you pay for them. b. vice-versa, the products and prices ____________ affects your ___________. I. Understanding Your Role in the Economy A. The U.S. has a ____________Economy 1. most economic decisions made by individuals looking out for _________________________. a. ____________ gov’t interference 2. is ____________ a. the ____________ you make as a consumer affects the products made and prices you pay for them. b. vice-versa, the products and prices ____________ affects your ___________.

2. p. 2 Being an Economically Smart Citizen 3. is based on ____________ a. system in which citizens own most of the means of production. 4. is based on ____________ ____________ a. businesses compete for profit B. ____________ try to persuade people to make certain economic actions. C. ____________ forces businesses to produce quality products at low prices. 3. is based on ____________ a. system in which citizens own most of the means of production. 4. is based on ____________ ____________ a. businesses compete for profit B. ____________ try to persuade people to make certain economic actions. C. ____________ forces businesses to produce quality products at low prices.

3. p. 3 Being an Economically Smart Citizen D. Role of gov’t 1. helps maintain ____________ markets. 2. provide ____________ private sector doesn’t. 3. use incentives to ____________ and ____________ people and businesses to take certain action. II. Making Wise Choices A. ____________ Choice 1. choosing the ____________ that has the greatest value from a group of like-products. a. generates the ____________ value for a given expenditure. D. Role of gov’t 1. helps maintain ____________ markets. 2. provide ____________ private sector doesn’t. 3. use incentives to ____________ and ____________ people and businesses to take certain action. II. Making Wise Choices A. ____________ Choice 1. choosing the ____________ that has the greatest value from a group of like-products. a. generates the ____________ value for a given expenditure.

4. p. 4 Economic Resources I. Producing ____________ and ____________ A. Economic ____________ includes goods and services. B. Four Factors of Production 1. ____________ resources. a. gifts of nature 2. ____________ resources a. labor (nation’s workforce) 3. ____________(goods) a. tools, machinery, and buildings used to make other products. 4. ____________ a. individuals who start businesses, introduce new products, and improve management techniques. I. Producing ____________ and ____________ A. Economic ____________ includes goods and services. B. Four Factors of Production 1. ____________ resources. a. gifts of nature 2. ____________ resources a. labor (nation’s workforce) 3. ____________(goods) a. tools, machinery, and buildings used to make other products. 4. ____________ a. individuals who start businesses, introduce new products, and improve management techniques.

5. p. 5 Supply and Demand

6. © p. 6 The Law of Demand The law of demand holds that other things equal, as the price of a good or service ____________, its quantity demanded ____________. –The reverse is also true: as the price of a good or service ____________, its quantity demanded ____________. The law of demand holds that other things equal, as the price of a good or service ____________, its quantity demanded ____________. –The reverse is also true: as the price of a good or service ____________, its quantity demanded ____________.

7. p. 7 Demand Curve The demand curve has a ____________ slope, consistent with the law of demand.

8. p. 8 The Law of Supply The law of supply holds that other things equal, as the price of a good ____________, its quantity supplied will ____________, and vice versa. Why do producers produce more output when prices rise? –They seek ________________________ –They can cover ____________marginal costs of production The law of supply holds that other things equal, as the price of a good ____________, its quantity supplied will ____________, and vice versa. Why do producers produce more output when prices rise? –They seek ________________________ –They can cover ____________marginal costs of production

9. p. 9 Supply Curve The supply curve has a ____________slope, consistent with the law of supply.

10. p. 10 Equilibrium In economics, an equilibrium is a situation in which: –there is no inherent tendency to ____________, –quantity demanded ____________ quantity supplied In economics, an equilibrium is a situation in which: –there is no inherent tendency to ____________, –quantity demanded ____________ quantity supplied

11. p. 11 Equilibrium Equilibrium occurs at a price of $ ____ and a quantity of ______units.

12. p. 12 Shortages and Surpluses A shortage occurs when quantity ____________ exceeds quantity supplied. –A shortage implies the market price is too ____________. A surplus occurs when quantity ____________ exceeds quantity demanded. –A surplus implies the market price is too ____________. A shortage occurs when quantity ____________ exceeds quantity supplied. –A shortage implies the market price is too ____________. A surplus occurs when quantity ____________ exceeds quantity demanded. –A surplus implies the market price is too ____________.

13. p. 13 Shift in the Demand Curve A change in any ____________ other than price that influences quantity demanded produces a shift in the demand curve or a change in demand. Factors that shift the demand curve include: –____________ ____________ –Population change –____________ ____________ –Prices of related goods: ____________ : goods consumed in place of one another ____________ : goods consumed jointly A change in any ____________ other than price that influences quantity demanded produces a shift in the demand curve or a change in demand. Factors that shift the demand curve include: –____________ ____________ –Population change –____________ ____________ –Prices of related goods: ____________ : goods consumed in place of one another ____________ : goods consumed jointly

14. p. 14 Shift in the Demand Curve This demand curve has shifted to the ____________. Quantity demanded is now higher at any given price.

15. p. 15 Equilibrium After a Demand Shift The shift in the demand curve moves the market equilibrium from point A to point B, resulting in a ____________ price and ____________ quantity.

16. p. 16 Shift in the Supply Curve A change in any variable other than ____________ that influences quantity supplied produces a shift in the supply curve or a change in supply. Factors that shift the supply curve include: –Change in input costs –________________________ –Change in size of the industry A change in any variable other than ____________ that influences quantity supplied produces a shift in the supply curve or a change in supply. Factors that shift the supply curve include: –Change in input costs –________________________ –Change in size of the industry

17. p. 17 Shift in the Supply Curve For an given rental price, quantity ____________ is now lower than before.

18. p. 18 Equilibrium After a Supply Shift The shift in the supply curve moves the market equilibrium from point A to point B, resulting in a ____________ price and ____________ quantity.

19. p. 19 Price Ceilings & Floors A price ceiling is a legal ____________ that can be charged for a good. –Results in a ____________ of a product –Common examples include apartment rentals and credit cards interest rates. A price floor is a legal ____________ that can be charged for a good. –Results in a ____________ of a product –Common examples include soybeans, milk, ____________ ____________ A price ceiling is a legal ____________ that can be charged for a good. –Results in a ____________ of a product –Common examples include apartment rentals and credit cards interest rates. A price floor is a legal ____________ that can be charged for a good. –Results in a ____________ of a product –Common examples include soybeans, milk, ____________ ____________

20. p. 20 Price Ceiling A price ceiling is set at $2 resulting in a ____________ of 20 units.

21. p. 21 Price Floor A price floor is set at $4 resulting in a ____________ of 20 units.