Download - Economics Unit Notes
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A society in which most economicdecisions are based on customs.
Traditional Economy1
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A society in which the governmentmakes the economic decisions.
Command Economy2
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A society in which economicdecisions are made by individuals
and businesses.
Free Market Economy3
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A society in which economicdecisions are made by individuals
and businesses with somegovernment regulations.
Mixed Economy4
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A business owned by one person.
Proprietorship5
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A business that has two or moreowners that share risks and profits.
Partnership6
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A business owned by stockholders(investors) whose risk is limited to
the amount of their investment.
Corporation7
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A business owned by the people thatuse its services.
Cooperative8
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Someone who purchased goods orservices for personal use.
Consumer9
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A business that produces or providesgoods and/or services.
Producer10
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Scarcity means that resources arelimited. The two most commonlimited resources are time and
money.
Scarcity11
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Because of scarcity, people,businesses, and government have to
make choices.
Choices12
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When you give up a second choice,that choice is called the opportunity
cost.
Opportunity Cost13
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Natural Resources are provided bynature.
Natural Resources14
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Capital Resources are the tools andequipment a business uses to
produce goods or services.
Capital Resources15
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Human Resources are the labor andskills people provide to businesses.
Human Resources16
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The diagram shows the circular flow
in economics.
Circular Flow17
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Households sell labor and skills to
businesses.
Labor and Skills18
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Households buy goods and services
from businesses.
Goods and Services19
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Supply is determined by producers.
Supply20
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Demand is determined byconsumers.
Demand21
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Price is determined by the interactionof supply and demand.
Price22
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Lets look at how this
interaction between supplyand demand works, how
price is determined.
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For some people, a long day at thebeach is best ended with a big juicy
cheeseburger.
http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=HkbSUzZGMQLKUM&tbnid=F7qs5TsdyKNJ4M:&ved=0CAUQjRw&url=http://www.pathaverfield.com/food-one/bacon-cheeseburger-4_13_189.html&ei=vvVIUYPVCors9ATbooHYDA&bvm=bv.44011176,d.eWU&psig=AFQjCNH5N7LtH9OGmMzgwhZGGeemamsEdA&ust=1363822385575135http://www.google.com/url?sa=i&source=images&cd=&cad=rja&docid=WKW47RkGZXedOM&tbnid=4Tvp52iixvOnjM:&ved=0CAUQjRw&url=http://www.rocknflops.com/&ei=RfVIUZnmC4qm9gSu4IAw&psig=AFQjCNEMJD7XFMuKjCi6Y56TJEsVK5tRiQ&ust=1363822259359563 -
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But how much will that cheeseburgercost?
Whatdetermines its
price?
http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=HkbSUzZGMQLKUM&tbnid=F7qs5TsdyKNJ4M:&ved=0CAUQjRw&url=http://www.pathaverfield.com/food-one/bacon-cheeseburger-4_13_189.html&ei=vvVIUYPVCors9ATbooHYDA&bvm=bv.44011176,d.eWU&psig=AFQjCNH5N7LtH9OGmMzgwhZGGeemamsEdA&ust=1363822385575135 -
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Of course the restaurants can putany price they want on the menu.
But what willhappen if theprice is higherthan people
are willingand able to
pay?
$3.75
$2.50
$1.98
$5.98
http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=HkbSUzZGMQLKUM&tbnid=F7qs5TsdyKNJ4M:&ved=0CAUQjRw&url=http://www.pathaverfield.com/food-one/bacon-cheeseburger-4_13_189.html&ei=vvVIUYPVCors9ATbooHYDA&bvm=bv.44011176,d.eWU&psig=AFQjCNH5N7LtH9OGmMzgwhZGGeemamsEdA&ust=1363822385575135http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=HkbSUzZGMQLKUM&tbnid=F7qs5TsdyKNJ4M:&ved=0CAUQjRw&url=http://www.pathaverfield.com/food-one/bacon-cheeseburger-4_13_189.html&ei=vvVIUYPVCors9ATbooHYDA&bvm=bv.44011176,d.eWU&psig=AFQjCNH5N7LtH9OGmMzgwhZGGeemamsEdA&ust=1363822385575135http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=HkbSUzZGMQLKUM&tbnid=F7qs5TsdyKNJ4M:&ved=0CAUQjRw&url=http://www.pathaverfield.com/food-one/bacon-cheeseburger-4_13_189.html&ei=vvVIUYPVCors9ATbooHYDA&bvm=bv.44011176,d.eWU&psig=AFQjCNH5N7LtH9OGmMzgwhZGGeemamsEdA&ust=1363822385575135http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=HkbSUzZGMQLKUM&tbnid=F7qs5TsdyKNJ4M:&ved=0CAUQjRw&url=http://www.pathaverfield.com/food-one/bacon-cheeseburger-4_13_189.html&ei=vvVIUYPVCors9ATbooHYDA&bvm=bv.44011176,d.eWU&psig=AFQjCNH5N7LtH9OGmMzgwhZGGeemamsEdA&ust=1363822385575135 -
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If restaurants set the price too low,they may sell out before the end of
the day.
So the price cant
just be set by therestaurants.
Customers playan important
role.
$3.75
$2.50
$1.98
$5.98
k ll h
http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=HkbSUzZGMQLKUM&tbnid=F7qs5TsdyKNJ4M:&ved=0CAUQjRw&url=http://www.pathaverfield.com/food-one/bacon-cheeseburger-4_13_189.html&ei=vvVIUYPVCors9ATbooHYDA&bvm=bv.44011176,d.eWU&psig=AFQjCNH5N7LtH9OGmMzgwhZGGeemamsEdA&ust=1363822385575135http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=HkbSUzZGMQLKUM&tbnid=F7qs5TsdyKNJ4M:&ved=0CAUQjRw&url=http://www.pathaverfield.com/food-one/bacon-cheeseburger-4_13_189.html&ei=vvVIUYPVCors9ATbooHYDA&bvm=bv.44011176,d.eWU&psig=AFQjCNH5N7LtH9OGmMzgwhZGGeemamsEdA&ust=1363822385575135http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=HkbSUzZGMQLKUM&tbnid=F7qs5TsdyKNJ4M:&ved=0CAUQjRw&url=http://www.pathaverfield.com/food-one/bacon-cheeseburger-4_13_189.html&ei=vvVIUYPVCors9ATbooHYDA&bvm=bv.44011176,d.eWU&psig=AFQjCNH5N7LtH9OGmMzgwhZGGeemamsEdA&ust=1363822385575135http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=HkbSUzZGMQLKUM&tbnid=F7qs5TsdyKNJ4M:&ved=0CAUQjRw&url=http://www.pathaverfield.com/food-one/bacon-cheeseburger-4_13_189.html&ei=vvVIUYPVCors9ATbooHYDA&bvm=bv.44011176,d.eWU&psig=AFQjCNH5N7LtH9OGmMzgwhZGGeemamsEdA&ust=1363822385575135 -
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Lets say we ask all the customers at
the beach how many cheeseburgers
they would be willing to buy atvarious prices.
http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=zOD0L9tu6MoKaM&tbnid=cX4Icq2RrW148M:&ved=0CAUQjRw&url=http://nexxtlevelup.com/everything-else/survey-time&ei=_PdIUeOEA4j28gTQ9ICQDg&bvm=bv.44011176,d.eWU&psig=AFQjCNE5ErQNkwUQ1sJkDGTQeKuA4eDxOw&ust=1363822938050756http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=HkbSUzZGMQLKUM&tbnid=F7qs5TsdyKNJ4M:&ved=0CAUQjRw&url=http://www.pathaverfield.com/food-one/bacon-cheeseburger-4_13_189.html&ei=vvVIUYPVCors9ATbooHYDA&bvm=bv.44011176,d.eWU&psig=AFQjCNH5N7LtH9OGmMzgwhZGGeemamsEdA&ust=1363822385575135 -
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The tableshows the total
number ofcheeseburgers
the people arewilling to buy.Notice as the
price goes up,they are less
willing to buy.
PriceQuantity
Demanded
$1.00 4,000
$2.00 2,500
$3.00 1,750
$4.00 1,250
$5.00 800
$6.00 500
This is called ademand schedule.
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Now lets ask the restaurants how
many cheeseburgers they would bewilling to sell at various prices.
Th t bl
http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=zOD0L9tu6MoKaM&tbnid=cX4Icq2RrW148M:&ved=0CAUQjRw&url=http://nexxtlevelup.com/everything-else/survey-time&ei=_PdIUeOEA4j28gTQ9ICQDg&bvm=bv.44011176,d.eWU&psig=AFQjCNE5ErQNkwUQ1sJkDGTQeKuA4eDxOw&ust=1363822938050756http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=HkbSUzZGMQLKUM&tbnid=F7qs5TsdyKNJ4M:&ved=0CAUQjRw&url=http://www.pathaverfield.com/food-one/bacon-cheeseburger-4_13_189.html&ei=vvVIUYPVCors9ATbooHYDA&bvm=bv.44011176,d.eWU&psig=AFQjCNH5N7LtH9OGmMzgwhZGGeemamsEdA&ust=1363822385575135 -
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The tableshows the total
number ofcheeseburgersthe restaurants
are willing tosell. Notice as
the price goesup, they aremore willing to
sell.
PriceQuantitySupplied
$1.00 500
$2.00 1,700
$3.00 2,500
$4.00 3,100
$5.00 3,600
$6.00 4,000
This is called asupply schedule.
W fi d h ilib i i
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We can find the equilibrium price,the best price for both the consumer
and the producer, by graphing theinformation from the charts.
http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=FnzQt0p2AMSNeM&tbnid=k8Kl7APDG6UvSM:&ved=0CAUQjRw&url=http://www.tv411.org/math/basic-math/how-read-bar-graph&ei=6ftIUdX4HYek9ATaioDYCw&bvm=bv.44011176,d.eWU&psig=AFQjCNEOmzTKtixSV0KCkgsLjkBghOprPA&ust=1363823926453684 -
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1
4
3
6
5
2
4500750 300022501500 3750
Price
($)
Q tit
SupplyDemand
Equilibrium Price