HISTORY & GEOGRAPHY 707ECONOMICS—

RESOURCES AND NEEDS

CONTENTS

I. WHAT IS ECONOMICS? . . . . . . . . . . . . . . . . 2

Human Wants . . . . . . . . . . . . . . . . . . . . . . . 3

Economic Systems . . . . . . . . . . . . . . . . . . . 5

Resources Available . . . . . . . . . . . . . . . . . . 6

Choice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

II. METHODS AND TOOLS OF THE ECONOMIST 15

Market Mechanism . . . . . . . . . . . . . . . . . . . 15

Competition . . . . . . . . . . . . . . . . . . . . . . . 19

Role of Government . . . . . . . . . . . . . . . . . . 22

Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

III. AN EXPERIMENT IN ECONOMY . . . . . . . . . . 28

Biblical Insights . . . . . . . . . . . . . . . . . . . . . 28

Personal Financial Program . . . . . . . . . . . . 29

Author: Alpha Omega PublicationsEditor: Alan Christopherson, M.S.Graphic Design: Alpha Omega Publications

804 N. 2nd Ave. E., Rock Rapids, IA 51246-1759© MCMXCVIII by Alpha Omega Publications, Inc. All rights reserved.LIFEPAC is a registered trademark of Alpha Omega Publications, Inc.

All trademarks and/or service marks referenced in this material are the property of their respective owners. Alpha Omega Publications, Inc.makes no claim of ownership to any trademarks and/or service marks other than their own and their affiliates’, and makes no claim of affiliation

to any companies whose trademarks may be listed in this material, other than their own.

1

OBJECTIVES

Read these objectives. The objectives tell you what you will be able to do whenyou have successfully completed this LIFEPAC.

When you have finished this LIFEPAC, you should be able to:

1. Define economics.

2. Differentiate wants from needs.

3. Describe supply and demand.

4. Describe how prices regulate supply and demand.

5. Describe savings and investments.

6. Explain the difference between a producer’s and a consumer’s market.

7. Make a comparison between free enterprise and communism.

8. Describe the function of taxes.

9. Describe how government can regulate the economy.

10. Describe the characteristics and functions of money.

11. Develop a sound personal financial program.

12. Make wiser choices as a consumer.

13. Tell what the Bible says about money management.

Survey the LIFEPAC. Ask yourself some questions about this study. Write yourquestions here.

__________________________________________________________________________________________

__________________________________________________________________________________________

__________________________________________________________________________________________

__________________________________________________________________________________________

__________________________________________________________________________________________

__________________________________________________________________________________________

__________________________________________________________________________________________

__________________________________________________________________________________________

__________________________________________________________________________________________

ECONOMICS—RESOURCES AND NEEDSEconomics is the study of the consump-

tion, production, and distribution of wealth.It deals with our wants as human beings,the resources we possess, and the choiceswe have to make. Economists use a varietyof methods and tools in their work. Theyare interested in the market, competition,

government, and money. In this LIFEPAC®

you will see how these tools apply to oureconomic system. You will read what theBible says about economics, and you willalso start to develop a personal financialprogram.

2

SECTION OBJECTIVES

Review these objectives. When you have completed this section, you shouldbe able to:

1. Define economics.

2. Differentiate wants from needs.

3. Describe supply and demand.

12. Make wiser choices as a consumer.

VOCABULARY

Study these words to enhance your learning success in this section.agrarian (u grãr’ e- un). Having to do with farming, using, or owning land; agricul-

tural.consumers (kun sü’ murz). People whose wants are satisfied.communism (ko’ mü ni zum). Economic system in which the government controls all

economic decisions.economics (ek u nom’ iks). The study of the production, distribution, and consump-

tion of wealth.economic system (ek u nom’ ik sis’ tum). Organized system by which a nation uses

its resources to satisfy its wants.free enterprise (fre- en’ tur pri-z). Economic system of the United States.market (mar’ ket). Demand for commodity or service.producers (pro dü’ surz). Human resources.subsidy (sub’ su de-). Money granted by the government.

Economics is the study of the produc-tion, distribution, and consumption ofwealth. A direct relationship existsbetween the things wanted or needed, and

the resources that are available. In this firstsection you will learn about this relation-ship and how you, as a consumer, canmake wise choices.

I. WHAT IS ECONOMICS?

Note: All vocabulary words in this LIFEPAC appear in boldface print the first time they areused. If you are not sure of the meaning when you are reading, study the definitions given.

Pronunciation Key: hat, a-ge, cãre, fär; let, e- qual, te.rm; it, i

-ce; hot, o-pen, ôrder; oil; out;

cup, pu. t, rüle; child; long; thin; /T-H/ for then; /zh/ for measure; /u/ represents /a/ in about,/e/ in taken, /i/ in pencil, /o/ in lemon, and /u/ in circus.

3

Since economics studies the produc-tion, distribution, and consumption ofwealth, it is concerned with human wantsand needs. Each country or society has agreat variety of wants and needs. Whereverthey live, people always seem to want morefood, clothes, houses, cars, recreation, andservices. Such normal human wants are lim-itless. A list of all our wants would probablybe quite lengthy. However, care must betaken not to confuse our wants with ourneeds. The Bible says in Matthew 6:31through 33 that we should not worry abouthaving an abundance to eat or to wear. Ourheavenly Father knows that we need foodand clothing. He will give them to us if weseek His kingdom and His righteousness.Wants, then, are limitless and varied, butfood, clothing, and shelter are the basicneeds.

Simple societies. In the United Stateshuman wants and needs are very differentfrom those of other countries. United Statescitizens have been blessed with food,clothing, automobiles, and lovely homes.Even the poorest people in this country earnmore money than three-fourths of the restof the people in the world. In the underde-veloped nations of Africa, Asia, and LatinAmerica, the people barely have enough toeat. What people in the United States earnin a month is often more than others in theworld earn in a year. Many of these poorpeople live on one scant meal a day, but weusually have three meals in addition tosome snacks.

Thousands of people around the worldlive in crowded, crude homes. Often theyhave no sanitary facilities and no water.They sleep on mats or bare floors, and theirclothing is sparse. For these people, life is astruggle to fulfill the needs for survival.

Most people in the underdevelopedcountries are farmers, but few have tools ormachines to help work their land efficiently.The little money they earn is spent onkeeping themselves and their families alive.Nearly every penny is taken just to do that.

They have no money to invest in machinery,factories, roads, and schools. The people,by and large, are uneducated. Without edu-cation they do not have the skills andknowledge to use the resources of theirland. This lack of skills and knowledgecreates a vicious cycle of more poverty andless education.

As was mentioned before, most of thepeople living in underdeveloped countriesare farmers. Therefore, they have a fairlysimple society. Each person depends firston himself and on his immediate family tosupply his needs from the land. If his needscannot be supplied that way, he then turnsto his relatives and neighbors for trade andassistance. When this source fails, thefamily will probably starve. Where elsecould they turn? Without money they areunable to buy food and clothing or even theseed to plant their crops. The governmentsdo not have the money to carry out com-plete subsidy programs.

Complex societies. In this country,however, a much more complex societyexists. Some people may grow a few veg-etables or even some meat; but on thewhole, we are all very dependent uponothers for our needs. Huge farms andranches grow our fruits, vegetables, andmeats. Besides the farmers, we rely on thecompanies who process the food in cans,bottles, or packages. We rely on the peoplewho transport the goods to the stores.Beyond that, we rely on the storekeepers tokeep things in stock for us. If any part of thischain breaks down, we are virtually helplessto take care of our basic human needs. Iftruck drivers go on strike and refuse to bringus meat and dairy products, we have to gowithout. Even though we are a rich country,we are very dependent upon other people tosatisfy our needs.

This dependence includes people fromother countries. Since we are such awealthy land, we can afford goods and ser-vices from around the world. Other nationsproduce the cars, electronic equipment,

HUMAN WANTS

4

Complex Society

Complete these statements.

1.1 Human wants are _________________________ .

1.2 The _________________________ says that we should not worry about havingan abundance to eat and wear.

1.3 Boats, games, and chocolate are a partial list of human __________________ .

1.4 Our _________________________ are the basics of food, clothing, and shelter.

1.5 A society in which a person depends primarily on himself and hisfamily to supply his needs from the land is called a_________________________ society.

cameras, watches, and toys that we want. Ifour relations with those countries breakdown, we can no longer depend on thesupply of these imported products.

Other societies. Between our verycomplex society and the very simple soci-eties of the underdeveloped countries arethe societies that are a combination of thetwo extremes. Countries with such societiesare basically agrarian, or farming, but alsohave some of the characteristics of a morecomplex society. The people farm the land,

but they use machinery and are educated inhow to raise the best crops and how to usetheir resources efficiently. They can make aprofit on their crops and other goods. Thatprofit enables them to buy different goodsand services and to raise their standard ofliving. These people are not dependent onlyupon their own families and relatives as thepeople of simple societies are. They also arenot totally dependent upon other countriesas complex societies are. They are balancedbetween the two types of economy.