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Economics Study Guide
consumer
entrepreneur
Word Bank
service
production
economics
competition
producer
scarcity
goods
supply
demand
price
interdependent
Part 1—Write correct vocabulary word.
1. service - the act that a person does in return for pay
2. scarcity - not enough to meet a demand; when people want more goods and services than available
3. goods - the objects that are made from resources; these objects may be sold to make money.
4. economics - the business of buying and selling goods and services
5. supply - the amount available for use; the amount of a product or service there is available
6. consumer - a person who buys or uses a good or a service
7. entrepreneur - someone who takes risk by starting his own business
8. producer - someone who makes a product
9. price - the amount of money needed to buy a product or service
10. demand - the need or want that people have for a good or service
11. interdependent - when producers and consumers rely on each other
12. competition - what happens when two or more companies produce and sell the same good or service
13. production - putting together resources using machines or hands to make a product
Part 2—Business Sense
Be able to explain how the demand affects the price of products and services.
Demand Increases= Price increases
Demand Decreases= Price decreases
Be able to explain how the price of a product or service affects the demand.
Price Increases= Demand decreases
Price Decreases= Demand increases
Part 3—In Your Own Words
Identify and explain the natural, human, and capital resources used to market a product or service.
An entrepreneur is a person who takes a risk and starts a business. The businessman (entrepreneur) uses
human, natural and capital resources to make a product or service. For example, in the story we read about
making jeans, the cotton (natural resource) is harvested using machines (capital resource). People (human
resource) then make jeans out of the cotton. The jeans are sold in the store. There is much more to the process of
producing and marketing jeans, but this example helps to understand the four different types of resources - standard SS3E1 The student will
describe the four types of productive resources:
a. Natural (land)
b. Human (labor)
c. Capital (capital goods)
d. Entrepreneurship (used to create goods and services)
Explain the purpose and benefits of an assembly line.
An assembly line is a team of specialized workers who make a product by following steps. An assembly line
can produce goods quickly and at a low cost. Each worker completes just one step before passing the
product to the next person.
Give examples of how an assembly line could be used in producing a product.
Making blue jeans:
First set of workers clean the cotton and spin it into yarn
Second set of workers dye and weave the yarn into cloth
Third set of workers cut the cloth and sew the pieces together.
What does import and export mean?
import means to bring goods into our country…buying goods or services from sellers in other countries
export means to send goods out (exit) of our country …selling goods or services to buyers in other countries
What are the benefits of importing products in the US?
Importing gives consumers more choices and a chance to buy goods at a lower cost
What are the benefits of exporting products in the US?
Exporting helps producers sell more goods and services
Explain income and budget in your own words.
An income is the money people earn for work. People earn different incomes for different jobs. They then
use their income to pay for goods and services (things they need and want). Sometimes people make a
budget, a plan for using their money. They can spend the money right away or save money for future use.
What is currency? Does every country have the same currency?
Currency is the form of money used by people in a country. Different forms of currency are used around the
world. The United States uses dollars and cents.
What are costs and benefits?
costs are negative results and benefits are positive results. Opportunity cost means what you have to give
up to get something else. (Remember the example in the book of the CD and the jacket. Marisa couldn’t
afford to buy both so she had to give up getting one so she could purchase the other.)