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Name _____________________________ Class _______________ Date ____________
Social Studies 9 • Economic Principles Review 1
3.1
examine and explain the role that basic economic principles play in daily life
Instructions: Fill in any 20 of the blanks with the correct answers. Use the Word Box on
the back. Some words may be used more than once. When you are finished you should be
able to explain the role that basic economic principles play in daily life.
1. Economics is the study of our efforts to satisfy our unlimited WANTS through the
use of our limited RESOURCES (p.141)
2. To an economist, something is SCARCE only if someone will buy it for a price.
(p.141)
3. Scarce things (that is, things people will buy) are divided into two groups:
a. GOODS (commodities or products)
b. SERVICES (work done for other people) (p.141)
4. When something is scarce, it has to be rationed, or limited. In our economy, the usual
way of determining who gets scarce things is PRICE RATIONING. (p.142)
5. The OPPORTUNITY COST is what someone will give up in order to buy something
else. (p.143)
6. IMPULSE BUYING is what we do when we make a purchase without weighing the
opportunity cost. (p.143)
7. We create DEMAND for an item when we are willing and able to give something of
value – usually money – for it. Anything that is scarce enough to demand a price is
classified as an economic good or service. (p.144)
8. SUPPLY (the quantities of an economic good or service that producers will be
willing and able to supply at certain prices) is the mirror image of demand.
9. Fill in the chart below to explain the Law of Supply and Demand. (p.144)
Demand side =
CONSUMERS
(or buyers)
High quantity demanded =
HIGH
price
Low quantity demanded =
LOW
price
Supply side =
PRODUCERS
(or, sellers)
High quantity supplied =
LOW
price
Low quantity supplied =
HIGH
price
Name _____________________________ Class _______________ Date ____________
Social Studies 9 • Economic Principles Review 1
3.1 examine and explain the role that basic economic principles play in daily life
Remember that as the price of something rises, suppliers produce more of it, and as the
price of something falls, suppliers produce less of it.
10. The HIDDEN MARKET are potential customers, not being served by existing goods
and service. (p.146, glossary) An astute business person would think of a way to
reach this part of the market, with it potential customers.
11. Some people would probably buy cheaper alternatives if they were available. The
SUBSTITUTION EFFECT tells us that for any economic good or service there is a
substitute. If the price of one product is too high, people will tend to buy a substitute.
(p.146)
12. Demonstrate that you know the difference between consumer credit and investment
credit. (p.150)
a. If you borrow to attend university, finance a small business, or buy a home it
is INVESTING / INVESTMENT CREDIT
b. If you borrow to take a vacation or buy new entertainment equipment it is
CONSUMING / CONSUMER CREDIT
13. The original sum that we borrow from a bank or invest is the PRINCIPAL.
14. The difference between the original sum that we borrow or invest and the larger
amount that we have to pay back or earn back is known as INTEREST.
15. When borrowing or investing money it is important to know the RATE OF
INTEREST (the amount paid per hundred dollars per year). It is expressed not as
dollars, but as a percent (%). (p.150) See page 151 for some questions to ask when
borrowing money.
Word Bank
Consumer credit
Consumers
Demand
Goods
Hidden market
High
Impulse buying
Interest
Investment credit
Low
Opportunity cost
Price rationing
Principal
Producers
Rate of interest
Resources
Scarce
Services
Substitution effect
Supply
Wants