CHAPTER
1
SLIDE 1
Economic Decisions
and Systems
1-1
Satisfying Needs and Wants
1-2
Economic Choices
1-3
Economic Systems
1-4
Supply and Demand
Checkpoint 
• What is the difference between a need and
a want?
– Needs are those things required to live, such as
food, clothing, and shelter.
– Wants are things that add comfort and
pleasure to our lives such as television, music
CDs, and movies.
SLIDE 2
NEEDS AND WANTS
• Needs are essential (Necessary Products)
• Wants add to the quality of life (Luxury
Products)
• Needs and wants are unlimited
• Resources are limited
SLIDE 3
GOODS vs SERVICES
• A Good is a tangible product
• EX: Phone
• A Service is an intangible act
• EX: Education
• Economic Resources- The factors of
production it takes to create a product
Checkpoint 
• What are the three types of economic resources?
Give an example of each type.
– Natural: water, land, trees, animals, and minerals.
– Human: labor (people who run farms and factories,
transport goods, provide services, or manage
businesses).
– Capital: money, land, buildings, tools, and equipment.
SLIDE 5
THE BASIC ECONOMIC PROBLEM
• Scarcity- Unlimited wants & needs but limited
resources
• Economic decision making:
– Choices
– Trade-offs- losing one idea to pursue another
Opportunity cost is the value of the next best
alternative that you don’t choose.
SLIDE 6
THE DECISION-MAKING PROCESS
1. Define the problem.
2. Identify the choices.
3. Evaluate the advantages and disadvantages of
each choice.
4. Choose one.
5. Act on your choice.
6. Review your decision.
SLIDE 7
THE THREE ECONOMIC QUESTIONS
• What to produce?
• How to produce?
• What needs and wants to satisfy?
SLIDE 8
TYPES OF ECONOMIC SYSTEMS
(How a society chooses to use resources)
• Command economy- controlled by government
• Market economy- controlled by supply and
demand
• Traditional economy- Older concept in underdeveloped countries (rely on natural resources)
• Mixed economies- a balance of government
controlled and free-market
SLIDE 9
Capitalism- Private ownership
People own businesses not government
• Name the four principles of the U.S.
economic system.
– Private property – owned by individual, not
business
– Freedom of choice- free to make business
decisions
– Profit- Revenue minus Expenses
– Competition- No monopolies, free to compete
SLIDE 10
PARTICIPATING IN A MARKET
ECONOMY
• Consumers set demand (the buyer or user)
(the want or need for a product)
• Producers establish supply (the creator, seller)
(the inventory of a product)
SLIDE 11
Checkpoint 
• How does the price of a product affect
demand and supply?
– As prices decrease, the number of consumers
willing and able to purchase the product
(demand) will increase.
– As prices increase, businesses will be willing to
supply larger quantities of the product.
SLIDE 12
Checkpoint 
• How is the market price for a product
determined?
– Supply, demand, and competition determine
the market price for a product or service.
– The market price is the point at which supply
and demand are equal.
SLIDE 13
ONLINE RESEARCH- NEW PRODUCTS
• Find and record information on 2 new
products that have been introduced to the
market within the last 6 months.
• Record this information on your worksheet,
find 2 products that you think will be
successful.