Economics-Economics

-the system that society uses toproduce and distribute goods andservices

-Why study economics???

-Why does the government pay somuch attention to the economy???

Wants and Needs-Wants are the things which people

would like to have

-Needs are the things which people needto survive

-Goods

-things that can be made ormanufactured

-Capital goods are the things used tomanufacture other goods

-consumer goods are goods meant tobe sold to consumers for use

-Services

-work that is done for someone for acertain price

Limited Availability

-Goods and Services are producedusing resources

Natural Resources or HumanResources

-Scarcity

-the economic problems of limitedgoods and the unlimited wants ofsociety in general

-Scarcity limits the availability ofgoods and services that peopledesire or need.

-This scarcity gives goods andservices VALUE

Putting a Price on Things

-Price or VALUE is based on twobasic factors

Supply and Demand

-Supply

-the amount of a good or servicethat is available for consumers tobuy

-Demand

-the amount of a good or servicethat consumers are willing to buy

Determining Price

-Price is determined by comparingthe amount of demand to theamount of supply and finding anamount where they are equal

-Market or Equilibrium Price

-this is the point at which supplyand demand meet and price isdetermined

Effects of Price

-Shortages

-when demand is greater thansupply

-What happens to price?

-Surplus

-When supply is greater thandemand

-What happens to price?