Chapter 1

Economic Decisions and Systems

1-1 1-2 1-3 1-4 Satisfying Needs and Wants Economic Choices Economic Systems Supply and Demand
Introduction to Business
Thomson South-Western

LESSON 1-1

Satisfying Needs and Wants

Goals Explain the difference between needs and wants. Distinguish between goods and services. Describe the types of economic resources.
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Thomson South-Western

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Key Terms
needs wants goods services economic resources

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NEEDS AND WANTS

Needs are essential Wants add to the quality of life Needs and wants are unlimited

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>> C H E C K P O I N T
What is the difference between a need and a want?

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Thomson South-Western

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GOODS AND SERVICES

Goods and services for businesses and consumers The U.S. economy

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>> C H E C K P O I N T
How do people satisfy their wants and needs?

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ECONOMIC RESOURCES
Natural resources Human resources Capital resources Resources are limited

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>> C H E C K P O I N T
What are the three types of economic resources? Give an example of each type of resource.

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LESSON 1-2

Economic Choices
Goals Understand the basic economic problem. Explain the steps in the decisionmaking process.

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Introduction to Business
Thomson South-Western

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Key Terms
scarcity economic decision-making tradeoff opportunity cost

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THE BASIC ECONOMIC PROBLEM

Choices Tradeoffs and opportunity costs

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>> C H E C K P O I N T
What is opportunity cost?

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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.
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>> C H E C K P O I N T
What are the six steps in the decisionmaking process?

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LESSON 1-3

Economic Systems
Goals Identify the three economic questions. Differentiate among the main types of economic systems. Describe the economic system of the United States.
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Introduction to Business
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Key Terms
economic system command economy market economy traditional economy mixed economy capitalism
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Introduction to Business
Thomson South-Western

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THE THREE ECONOMIC QUESTIONS

What to produce? How to produce? What needs and wants to satisfy?

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>> C H E C K P O I N T
What are the three economic questions?

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TYPES OF ECONOMIC SYSTEMS

Command economy Market economy Traditional economy Mixed economies

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>> C H E C K P O I N T
What are the main differences among the three economic systems?

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THE U.S. ECONOMIC SYSTEM

Private property Freedom of choice Profit Competition

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>> C H E C K P O I N T
Name the four principles of the U.S. economic system.

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LESSON 1-4

Supply and Demand

Goals Describe supply and demand orally and with graphs. Discuss how supply and demand affect prices of products and services.

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Thomson South-Western

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Key Terms
consumer producers demand supply market price

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PARTICIPATING IN A MARKET ECONOMY

Consumers set demand Producers establish supply A graphic view

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DEMAND AND SUPPLY

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>> C H E C K P O I N T
How does the price of a product affect demand and supply?

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DETERMINING PRICE
Factors influencing demand Factors influencing supply Determining market price

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MARKET PRICE

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>> C H E C K P O I N T
How is the market price for a product determined?

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