Econ123by smk

Study Guide: Social Studies Test on 2/03/2012

Made by: S M K

Chapter 1: Economics in this world

Economics: What is it? Economics is about producing and

consuming goods and services Also about buying these goods and services Making choices If you buy food, that is involved in

economics; if you go to the doctor, that is involved in economics as well

Economics is a part of almost everything that you do.

Goods and Services Goods- Products; things you can touch

and use Services- Things people do for someone

else Example: You bought gas at the gas

station Gas- a good Gas station attendants serving oil- a

service

Examples of goods and services

Goods Goods Computers Bicycles Apples Books Dolls Jackets Telephones Socks Shoes Etc.

ServicesServices Check-up from doctor Waiter serving food Musicians Teachers Clerks Truck drivers to carry

your mail People who take your

money at the resister Etc.

Economic Choices A basic economic question is, “ How will

we use our scarce resources to satisfy our needs and wants?”

This is a question that a lot of groups and individuals use everyday.

(Physical)Needs (Physical) needs- things that are necessary

for life. These are some basic physical needs for

people: Air, water, iPods, food, clothing, TVs, shelter,

and heat All of these are necessary. The crossed out

ones are not. This is why iPods and TVs are not needs; they are wants.

Not permanently satisfied

Psychological Wants

Wants are NOT necessary for life. They are things that people want to make them happy.

Every person has different wants. Wants are based on where and when people

live. Ex) iPads were not people’s wants in the

1910s. Now they are. Ice cream, pair of boots, dolls, etc. Not permanently satisfied

Resources

Resources- what people use to make the things to satisfy their needs and wants.

These are the three basic types of resources:

Natural Resources- things found in nature

People- Made Resources- things made by people and used to make moreHuman Resources- labor

Examples of ResourcesNatural Resources

Air Water Plants Minerals Animals

People-Made Resources

Tools Factories Machineries computers

• Ideas• Work that

people do• Energy • Training

Human Resources

Scarcity Scarcity- when there is a gap between

needs and wants on one hand and available resources, goods, services on the other hand.

Scarcity exists when needs or wants are greater than available resources, goods, or services.

Chapter 2:Four economic questions

The four basic economic questions 1.What…? 2.How…? 3. How many/How much…? 4.Who…?

1. What…? This type of question deals with what

outputs will be produced or consumed Examples: -What will the farmer grow? -What will the factories make? -What will the tax money be spent for?

2. How…? This type of question deals with how

outputs are produced and how resources are used.

Examples: -How will the factories make a table? -How will the farmer grow apples? -How will they make clothes?

3. How Much/How Many…? This type of question deals with how

much or how many resources will be used. It also deals with how fast resources will be used up.

Examples: -How many trees will be cut? For how long can we use them? -How many tables will be made?

4. Who…? This type of question deals with the

distribution of output. These questions are affected by the costs of goods and services.

Examples: -Who will make the desks? -Who will be the gas-station attendant?

Alternative Cost Alternative Costs- what is given up when

a scarce resource is used in a certain way.

Example: You wanted to get 2 video games. However, you only had the money to get one. You decide to get the 1st game. The other video game is an alternative cost.

Economic Conflict Economic conflicts are based on values,

beliefs, and opinions. The decision depends on who makes the decision.

Example: Workers want to get more money for their work but their bosses doesn’t wants to.

Ways to settle Economic ConflictsThese are two ways that an economic conflict can be settled:• Market Bargaining• Government Actions

Chapter 2: Economic Systems

Economic System Economic Systems- a way of making

economic choices and decisions. Three basic types of economic systems: -Traditional Economies -Command Economies -Market Economies

Traditional EconomiesIn a traditional economy, economic decisions are based on tradition and custom. Children learn skills from their parents. The same goods and services are

produced generation after generation.

Advantages and Disadvantages of a Traditional Economy

Advantages: It is very stable. People know what to

expect. No one is left out.Disadvantages: Individuals don’t have much choice of

what they do. Changes come very slowly.

Command EconomiesCommand Economies- Economies in which a central authority makes all of the decisions.Central authority:☀ A king, dictator, powerful politician

party, etc.

Advantages of Command EconomiesAdvantages: Changes in what and how things are

produced. It is also produced fairly quickly.

The needs of the entire country can be considered by the central authority.

Disadvantages of Command Economies Individuals are not encouraged to make

new ideas. Individuals do not see why they should

work hard. Individuals do not always get their

needs and wants. Power is kept by very few people- who

often abuses the power for their benefit.

Market EconomiesMarket economies-the result of millions of buying and selling decisions made by millions of individuals. The U.S. economy is basically a market

economy.

Advantages of Market Economies A lot of people are involved in making

economical decisions. Individuals can work on whatever they

want to and are encouraged to develop new ideas.

Producers can produce whatever they wish. The economy is flexible. Consumers are free to buy the goods and

services they choose.

Disadvantages of Market Economies Individuals have no way of meeting their

needs. There is no guarantee that individuals

will succeed in their work. The needs of society as a whole is

overlooked; often not the needs of a individual.

The economy goes through ups and downs called business cycles.

Bibliography Our Economic SystemBy: Clairece Fegin

Mr. SchiffThank You!!