p. 1

Being an Economically Smart CitizenI. Understanding Your Role in the Economy

A. The U.S. has a ____________Economy

1. most economic decisions made by individuals looking out for _________________________.

a. ____________ gov’t interference

2. is ____________

a. the ____________ you make as a consumer affects the products made and prices you pay for them.

b. vice-versa, the products and prices ____________ affects your ___________.

I. Understanding Your Role in the Economy

A. The U.S. has a ____________Economy

1. most economic decisions made by individuals looking out for _________________________.

a. ____________ gov’t interference

2. is ____________

a. the ____________ you make as a consumer affects the products made and prices you pay for them.

b. vice-versa, the products and prices ____________ affects your ___________.

p. 2

Being an Economically Smart Citizen

3. is based on ____________

a. system in which citizens own most of the means of production.

4. is based on ____________ ____________

a. businesses compete for profit

B. ____________ try to persuade people to make certain economic actions.

C. ____________ forces businesses to produce quality products at low prices.

3. is based on ____________

a. system in which citizens own most of the means of production.

4. is based on ____________ ____________

a. businesses compete for profit

B. ____________ try to persuade people to make certain economic actions.

C. ____________ forces businesses to produce quality products at low prices.

p. 3

Being an Economically Smart CitizenD. Role of gov’t

1. helps maintain ____________ markets.

2. provide ____________ private sector doesn’t.

3. use incentives to ____________ and ____________ people and businesses to take certain action.

II. Making Wise Choices

A. ____________ Choice

1. choosing the ____________ that has the greatest value from a group of like-products.

a. generates the ____________ value for a given expenditure.

D. Role of gov’t

1. helps maintain ____________ markets.

2. provide ____________ private sector doesn’t.

3. use incentives to ____________ and ____________ people and businesses to take certain action.

II. Making Wise Choices

A. ____________ Choice

1. choosing the ____________ that has the greatest value from a group of like-products.

a. generates the ____________ value for a given expenditure.

p. 4

Economic ResourcesI. Producing ____________ and ____________

A. Economic ____________ includes goods and services.

B. Four Factors of Production

1. ____________ resources.

a. gifts of nature

2. ____________ resources

a. labor (nation’s workforce)

3. ____________(goods)

a. tools, machinery, and buildings used to make other products.

4. ____________

a. individuals who start businesses, introduce new products, and improve management techniques.

I. Producing ____________ and ____________

A. Economic ____________ includes goods and services.

B. Four Factors of Production

1. ____________ resources.

a. gifts of nature

2. ____________ resources

a. labor (nation’s workforce)

3. ____________(goods)

a. tools, machinery, and buildings used to make other products.

4. ____________

a. individuals who start businesses, introduce new products, and improve management techniques.

p. 5

Supply and

Demand

Supply and

Demand

© p. 6

The Law of Demand

• The law of demand holds that other things equal, as the price of a good or service ____________, its quantity demanded ____________.– The reverse is also true: as the price of a good or

service ____________, its quantity demanded ____________.

• The law of demand holds that other things equal, as the price of a good or service ____________, its quantity demanded ____________.– The reverse is also true: as the price of a good or

service ____________, its quantity demanded ____________.

p. 7

Demand Curve

The demand curve has a ____________ slope, consistent with the law of demand.

The demand curve has a ____________ slope, consistent with the law of demand.

p. 8

The Law of Supply

• The law of supply holds that other things equal, as the price of a good ____________, its quantity supplied will ____________, and vice versa.

• Why do producers produce more output when prices rise?– They seek ________________________– They can cover ____________marginal costs of

production

• The law of supply holds that other things equal, as the price of a good ____________, its quantity supplied will ____________, and vice versa.

• Why do producers produce more output when prices rise?– They seek ________________________– They can cover ____________marginal costs of

production

p. 9

Supply Curve

The supply curve has a ____________slope, consistent with the law of supply.

The supply curve has a ____________slope, consistent with the law of supply.

p. 10

Equilibrium

• In economics, an equilibrium is a situation in which: – there is no inherent tendency to ____________, – quantity demanded ____________ quantity

supplied

• In economics, an equilibrium is a situation in which: – there is no inherent tendency to ____________, – quantity demanded ____________ quantity

supplied

p. 11

Equilibrium

Equilibrium occurs at a price of $ ____ and a quantity of ______units.

Equilibrium occurs at a price of $ ____ and a quantity of ______units.

p. 12

Shortages and Surpluses

• A shortage occurs when quantity ____________ exceeds quantity supplied.– A shortage implies the market price is too

____________ .

• A surplus occurs when quantity ____________ exceeds quantity demanded. – A surplus implies the market price is too

____________ .

• A shortage occurs when quantity ____________ exceeds quantity supplied.– A shortage implies the market price is too

____________ .

• A surplus occurs when quantity ____________ exceeds quantity demanded. – A surplus implies the market price is too

____________ .

p. 13

Shift in the Demand Curve

• A change in any ____________ other than price that influences quantity demanded produces a shift in the demand curve or a change in demand.

• Factors that shift the demand curve include:– ____________ ____________ – Population change– ____________ ____________ – Prices of related goods:

• ____________ : goods consumed in place of one another• ____________ : goods consumed jointly

• A change in any ____________ other than price that influences quantity demanded produces a shift in the demand curve or a change in demand.

• Factors that shift the demand curve include:– ____________ ____________ – Population change– ____________ ____________ – Prices of related goods:

• ____________ : goods consumed in place of one another• ____________ : goods consumed jointly

p. 14

Shift in the Demand Curve

This demand curve has shifted to the ____________ . Quantity demanded is now higher at any given price.

This demand curve has shifted to the ____________ . Quantity demanded is now higher at any given price.

p. 15

Equilibrium After a Demand Shift

The shift in the demand curve moves the market equilibrium from point A to point B, resulting in a ____________ price and ____________ quantity.

The shift in the demand curve moves the market equilibrium from point A to point B, resulting in a ____________ price and ____________ quantity.

p. 16

Shift in the Supply Curve

• A change in any variable other than ____________ that influences quantity supplied produces a shift in the supply curve or a change in supply.

• Factors that shift the supply curve include:– Change in input costs

– ________________________

– Change in size of the industry

• A change in any variable other than ____________ that influences quantity supplied produces a shift in the supply curve or a change in supply.

• Factors that shift the supply curve include:– Change in input costs

– ________________________

– Change in size of the industry

p. 17

Shift in the Supply Curve

For an given rental price, quantity ____________ is now lower than before.

For an given rental price, quantity ____________ is now lower than before.

p. 18

Equilibrium After a Supply Shift

The shift in the supply curve moves the market equilibrium from point A to point B, resulting in a ____________ price and ____________ quantity.

The shift in the supply curve moves the market equilibrium from point A to point B, resulting in a ____________ price and ____________ quantity.

p. 19

Price Ceilings & Floors

• A price ceiling is a legal ____________ that can be charged for a good.– Results in a ____________ of a product– Common examples include apartment rentals and

credit cards interest rates.

• A price floor is a legal ____________ that can be charged for a good.– Results in a ____________ of a product– Common examples include soybeans, milk,

____________ ____________

• A price ceiling is a legal ____________ that can be charged for a good.– Results in a ____________ of a product– Common examples include apartment rentals and

credit cards interest rates.

• A price floor is a legal ____________ that can be charged for a good.– Results in a ____________ of a product– Common examples include soybeans, milk,

____________ ____________

p. 20

Price Ceiling

A price ceiling is set at $2 resulting in a ____________ of 20 units.

A price ceiling is set at $2 resulting in a ____________ of 20 units.

p. 21

Price Floor

A price floor is set at $4 resulting in a ____________ of 20 units.

A price floor is set at $4 resulting in a ____________ of 20 units.