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STANDARD CE.9a
Scarcity, Resources, Choice, Opportunity cost,
Price, Incentives
Supply and Demand, Production, and Consumption |
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How do people deal with
scarcity, resources, choice, opportunity cost, price, incentives, supply and
demand, production, and consumption? People
make choices about how to use limited
resources, decide the ownership of resources, and structure markets for the
distribution of goods and services.
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Scarcity is
the inability to satisfy all wants at the same time. All
resources and goods are limited.
This requires that choices be made. |
Resources are
factors of production that are used in the production of goods
and services. Types of resources are
natural, human,
capital, and
entrepreneurship. |
Choice is
selecting an item or action from a set of possible alternatives.
Individuals must choose/make decisions about desired goods and
services because these goods and services are limited. |
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Opportunity cost
is what is given up when a choice is made—the
highest valued alternative forgone. Individuals must consider
the value of what is given up when making a choice. |
Price is
the amount of money exchanged for a good or service. Interaction
of supply and demand determines price. Price determines who
acquires goods and services. |
Incentives are
things that incite or motivate.
Incentives are used to change economic
behavior.
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Supply and Demand
Interaction of supply and demand
determines price.
Demand is the amount of a good or
service that consumers are willing and able to buy at a certain
price.
Supply is the amount of a good or
service that producers are willing and able to sell at a certain
price. |
Production is
the combining of human, natural, capital, and entrepreneurship
resources to make goods or provide
services.
Resources available
and consumer
preferences determine what is produced. |
Consumption is
using goods and services.
Consumer preferences
and price determine what is
purchased. |
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STANDARD CE.9b
Free Market, Command, and Mixed Economies |
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What are the basic
characteristics of free market, command, and mixed economies?
The type of economy is determined by the
extent of government involvement in economic
decision making.
Characteristics of major economic systems:
• Free market
- Private ownership of
property/resources
- Profit
- Competition
- Consumer sovereignty
- Individual choice •
Command economy
- Central ownership of
property/resources
- Centrally-planned economy
- Lack of consumer choice
• Mixed economy
- Individuals and
businesses as decision makers for the private sector
- Government as decision maker for the public sector
- A greater government role than in a free market
economy
- Most common economic system today |
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STANDARD CE.9c
The U.S. Economy |
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What are the essential
characteristics of the United States economy?
The United States economy is a mixed
economy.
In the United States private individuals, businesses,
and government share economic decision making.
Characteristics of the United States
economy:
• Free markets—Markets
are allowed to operate without undue interference
from the government.
• Private property—Individuals and
businesses have the right to own personal
property as well as the means of production without undue interference
from the government.
• Profit—Profit consists of earnings
after all expenses have been paid.
• Competition—Rivalry between
producers/sellers of a good or service results in
better quality goods and services at a lower price.
• Consumer sovereignty—Consumers
determine through purchases, what goods and services will be produced.
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