the accumulation of those economic products
that are tangible, scarce, useful, and transferable
1. scarcity of resources, which results from society not
having enough resources to produce all of the
things people would like to have
the markets in which productive resources are
bought and sold
2. A need is a basic requirement for survival and
in product markets
the amount of output produced by a given
amount of inputs in a specific period of time
They increase productivity.
Government can help provide education and
health care; businesses can provide training;
individuals can further their own education.
includes food, clothing, and shelter. A want is a
way of expressing a need.
3. “There is no such thing as a free lunch.” It means
that most things in life are not free because
someone has to pay for the production in the
4. a. What to produce? b. How to produce? c. For
whom to produce?
5. a. land: natural resources not created by humans;
b. capital: the tools, equipment, machinery, and
factories used in the production of goods and
services; c. labor: people with all their efforts,
abilities, and skills; d. entrepreneur: a risk-taker in
search of profits who does something new with
2. decision-making grid
3. Opportunity cost
4. opportunity cost
5. fully employed
6. the process of creating goods and services
6. production possibilities frontier
7. a. description: We need to know what the world
7. maximum combinations
around us looks like. b. analysis: It helps us to
discover why things work and how things happen.
c. explanation: If we all have a common
understanding of the way our economy works,
some economic problems will be much easier to
address or even fix in the future. d. prediction: It
can help predict what may happen as well as the
likely consequences of different courses of action.
One cannot get enough economic products to
satisfy individual wants and needs
A consumer good is intended for final use by
individuals; a capital good is used to produce
other goods and services.
9. opportunity cost
10. production possibilities frontier
11. cost-benefit analysis
12. free enterprise economy
13. standard of living
1. an organized way of providing for the wants and
needs of people
2. a. The allocation of scarce resources and nearly all
work performed for someone
other economic activity stems from ritual, habit, or
a person who uses goods and services to satisfy
wants and needs
Advantages: Everyone knows what role to play.
a worth that can be expressed in dollars
the situation in which some necessities have
little monetary value while some non-necessities
have a much higher value
Disadvantages: It tends to discourage new ideas
and new ways of doing things; lack of progress
leads to a lower standard of living than in other
types of economic societies.
b. A central authority makes most of the economic
decisions, and people are expected to go along
with the leaders’ choices.
Advantages: It can change direction drastically in a
relatively short time; public services available.
Guided Reading Activities
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8. fully employed
Disadvantages: It is not designed to meet the wants
of consumers; does not give people the incentive to
work hard; requires a large decision-making
bureaucracy; does not have the flexibility to deal
with minor, day-to-day problems; people with new
or unique ideas find it difficult to get ahead.
c. People and firms act in their own best interests;
buyers and sellers can come together in order to...
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