Basic Economic Concepts
Chapter 1 review
Free Enterprise Economy
• Consumers and privately owned
businesses, rather than government make
the majority of the What, How and For
Whom decisions.
Three Basic Economic
Questions
1. WHAT to produce
2. HOW to produce
3. FOR WHOM to produce
4 Factors of Production
• In order to produce goods and services 4
elements are required
1.Land
2.Capital
3.Labor
4.Entrepreneurs
Goods & Services
GOODS ARE…..
THINGS PEOPLE MAKE!!!
EXAMPLES INCLUDE…..
FOOD
TOYS
BOOKS
BUILDINGS
SERVICES ARE…..
THINGS PEOPLE DO FOR
OTHER PEOPLE!!!
EXAMPLES INCLUDE…..
CUT HAIR
FIGHT FIRES
TEACH CHILDREN
HELP SICK PEOPLE
Goods, Service, Consumers
• Goods- item that serves an economic want
1. durable goods
2. non durable goods
• Service- a work that is performed for someone
• A service is something that can’t be touched
CAN YOU DECIDE WHICH OF THE
FOLLOWING IS A WORKER WHO
MAKES GOODS?
• TEACHER
• DOCTOR
• FARMER
CAN YOU DECIDE WHICH OF
THE FOLLOWING IS A
SERVICE WORKER?
• JANITOR
• FACTORY WORKER
• COOK
Paradox of Value
• Situation where some necessities have
less value than non-necessities
• Water v. diamonds
• Needs v. wants
•What makes
something
valuable???
Utility & Scarcity
• If a product is to have value it must have
utility (have use) & be scarce
•
or
Wants & Needs
• What makes something a want?
• What make something a need?
Question to ponder…
1) What is an example of a want and a
need in your life? What makes one
something you need and the other
something you want?
Wealth
• The wealth of a country is defined by…
• Products that are tangible, scarce, useful
and transferable from one person to
another.
Decision Making
• Process of making an economic choice
1. Know how to identify your problem
2. Analyze your alternatives
3. your choice will be based on cost
and benefits of each possibility
• Trade Offs (alternative choices)
• Opportunity cost- the cost of the next best
alternative use of money, time or resources
Video
• What were Kesha’s wants and needs?
• What were her opportunity costs?
Chapter 1: Economic Concepts
answer the following questions on your poster. Be sure to use pictures and words for each answer.
The Three Basic Economic
Questions:
1. What to produce
2.
3.
The Four Factors of Production:
1.
2.
3.
4.
Difference between services and
goods:
Difference between a want and a
need:
Chapter 1 Quiz
1.
2.
3.
4.
5.
6.
7.
8.
Scarcity
Needs
Wants
Trade offs
Opportunity costs
Goods (durable & non-durable)
Service
4 type of economic systems