Transcript Chapter 02
LESSON
2-1
ECONOMICS
AND DECISION
MAKING
GOALS
Describe the basic
economic problem.
List the steps of the
decision-making
process.
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The Basic Economic Problem
Scarcity refers to the limited resources
available to satisfy the unlimited needs
and wants of people.
Economics is the study of how people
choose to use limited resources to satisfy
their unlimited needs and wants.
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Making Economic Decisions
6
Review
decision
1
Define
problem
5
2
Take
action
Identify
alternatives
4
Make
choice
3
Evaluate
alternatives
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LESSON
2-2
BASICS OF
ECONOMICS
GOALS
Describe how the
market sets prices.
Explain the causes
of inflation.
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Price-Setting Activities
Supply is the relationship between the amount
of a good or service that businesses are willing
and able to make available and the price.
Demand is the relationship between the amount
of a good or service that consumers are willing
and able to purchase and the price.
Market price is the point at which supply and
demand cross.
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Supply and Demand
Demand
$12
Supply
Price per Tape
$10
$8
$6
Market Price
$4
$2
$0
0
10
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70
Number of Tapes
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LESSON
2-3
ECONOMIC
SYSTEMS
GOALS
Name the three main
factors of production.
Understand how different
countries make economic
decisions.
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Economic Resources Satisfy Needs
Natural resources
also known as land
Human resources
also known as labor
Capital resources
also known as capital
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Types of Economic Systems
Command Economies
Market Economies
Private property
Profit motive
Free, competitive marketplace
Mixed Economies
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LESSON
2-4
ACHIEVING
ECONOMIC
DEVELOPMENT
GOALS
Describe the factors
that affect economic
development.
Identify the different
levels of economic
development.
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Development Factors
Literacy level
Technology
Agricultural dependency
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Types of Development
Industrialized countries
Less-developed countries
Developing countries
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Levels of Economic Development
Less-Developed
Country
Low literacy
Limited
technology
Agricultural
or mining
economy
Developing
Country
Improving
literacy
Improving
technology
Decreasing
dependence
on agriculture
or mining
economy
Industrialized
Country
High literacy
Modern
technology
Industrial
economy
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LESSON
2-5
RESOURCES
SATISFY
NEEDS
GOALS
Discuss economic
principles that explain
the need for
international trade.
Identify various
measures of economic
progress and
development.
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Economics of Foreign Trade
Absolute advantage exists when a
country can produce a good or service at a
lower cost than other countries.
Comparative advantage exists when a
country can produce a good or service
with more efficiency than other countries.
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Measuring Economic Progress
Measure of Production
Gross domestic product (GDP)
Gross national product (GNP)
International Trade Activity
Balance of trade
Foreign exchange rate
Foreign debt
Other Economic Measurements
Consumer price index (CPI)
Unemployment
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