Download Standard CE.11a – Economic Concepts

Standard CE.11a – Economic Concepts
1. _____Scarcity___________ is the inability to satisfy all wants at the same time. All resources and goods
are limited. This requires that choices be made.
2. _____Resources___________ are factors of production that are used in the production of goods and
services. Types of resources are natural, human, capital, and entrepreneurship.
3. ______Choice_________ is selection of an item or action from a set of possible alternatives. Individuals
must choose or make decisions about desired goods and services because these goods and services are
limited.
4. ______Opportunity Cost__________________is what is given up when a choice is made—i.e., the
highest valued alternative is forgone. Individuals must consider the value of what is given up when
making a choice.
5. _____Price____________ is the amount of money exchanged for a good or service. Interaction of supply
and demand determines price. Price determines who acquires goods and services.
6. ____Incentives___________ are things that incite or motivate. Incentives are used to change economic
behavior.
7. ____Supply and Demand________________: Interaction of supply and demand determines price.
Demand is the amount of a good or service that consumers are willing and able to buy at a certain price.
Supply is the amount of a good or service that producers are willing and able to sell at a certain price.
8. ______Production_____________________ is the combining of human, natural, capital, and
entrepreneurship resources to make goods or provide services. Resources available and consumer
preferences determine what is produced.
9. _______Consumption____________________ is the using of goods and services. Consumer preferences
and price determine what is purchased and consumed.
Because of ____scarcity______ , I can’t have everything I want.
There aren’t enough
resources, so I have to make ____choices______ about what I want the most. When I make
a choice, whatever I give up is called my _________opportunity cost__________.
For
example, I want to go to out to dinner with my friends before the dance and go to a
movie the next day.
Unfortunately, I don’t have enough money to do both.
I have to
make a choice. I decide that I want to go out to dinner more than the movie. The movie,
which I am giving up, is called my _____opportunity cost__________.
Maybe if the movie
theater offered an __incentive___, like half-price tickets, I could afford to do both! I guess
I will just have to make the most of my dinner and CONSUME as much as I can afford! 
Standard CE 11.b – Major Economic Systems
Every country must develop an economic system to determine how to use its limited productive resources. The key
factor in determining the type of economy a country has is the extent of government involvement.
The three basic questions of economics
1. What will be ______produced________?
2. Who will _____ produce __________ it?
3. For whom will it be _____ produced __________?
Each type of economy answers the three basic questions
______differently_____________.
Characteristics of major economic systems
1. No country relies exclusively on markets _______to deal with the economic problem of scarcity_________
_______________________________________________________________________________________.
Traditional economy
1. Economic decisions are based on _______________custom and historical
precedent_________________________.
2. People often perform the same type of work as their ______parents and grandparents__________________,
regardless of _______ability or potential_____________________________________________.
Free market economy
1. ____Private ownership of property/resources____________________
2. ____Profit motive___________________________________________
3. ____Competition____________________________________________
4. ____Consumer Sovereignty____________________________________
5. ____Individual Choice_________________________________________
6. ____Minimal government involvement in the economy___________________
Command economy
1. __Central ownership_____ (usually by government) of ___property____/_____resources_____
2. ___centrally-planned economy_________
3. ___lack of consumer choice_________________
Mixed economy
1. Individuals and businesses are owners and __decision makers__ for the ___private sector___.
2. Government is __owner___ and decision maker for the ____public sector_____.
3. Government’s role is __greater___ than in a free market economy and _less__ than in a command economy.
4. Most economies today, including the ___United States______, are ___mixed___ economies.
Standard CE.11c – Characteristics of the United States Economy
The United States economy is primarily a free market economy; but
because there is some government involvement it is characterized as a
____mixed economy_________. Government
intervenes in a market economy when the perceived ___benefits_____
of a government policy outweigh the anticipated ____costs_______.
Characteristics of the United States economy
1. Markets are generally allowed to operate _________without undue interference________________
____from the government______________. Prices are determined by ___supply______ and
____demand_________ as buyers and sellers interact in the marketplace.
2. Private property: ______Individuals and businesses have the right to own real and personal property as
well as the means of production without undue interference from the government._________________
_______________________________________________________________________________________
3. Profit: _______Earnings after all expenses have been paid_______________________________________
_______________________________________________________________________________________
4. Competition: _______Rivalry between producers and/or sellers of a good or service; usually results in
better quality goods and services at lower prices._____________________________________________
_______________________________________________________________________________________
5. Consumer sovereignty: _____Consumers determine through purchases what goods and services will be
produced._____________________________________________________________________________
Government involvement in the economy is _________limited________. Most decisions regarding the
production of goods and services are made in the ______private_____ sector.
Standard CE.12a – Business Organizations
Basic types of business ownership
1. ___Proprietorship_____: A form of business organization with ___one_____ owner who takes all the
__risks___ and _____all the profits_______.
2. ___Partnership_____: A form of business organization with _____two____ or more owners who
___share____ the risks and the profits.
3. ___Corporation____: A form of business organization that is authorized by law to act as a legal entity
regardless of the _______________number of owners______________. Owners share the
_____profits_____. Owner liability is ____limited____ to the amount of their investment.
Entrepreneur
1. A person who takes a risk to produce and sell goods and services in search of ____profit________
2. May establish a business according to any of the ____three types of organizational structures_______
__________________________________________
Standard CE.12b – Economic Flow
Resources, goods and services, and money flow continuously among households, businesses, and markets in
the United States economy.
Economic flow (circular flow)
1. Individual and business saving and investment provide _____financial capital_______that can be
borrowed for business _____expansion________ and increased _____consumption______.
2. Individuals (households) _____own_____ the resources used in production, ______sell______ the
resources, and _______use the income________ to purchase products.
3. Businesses (producers) ____buy_____ resources; make ________products__________ that are sold to
individuals, other businesses, and the government; and use the _____profits_______ to buy more
resources.
4.
Governments use tax revenue from individuals and businesses to provide _____public goods and______
____services______________.
Economic Flow Chart
1. In our economy, individuals (households) do all except 
A reinvest profits by buying more resources.
B sell their resources (labor).
C use their income to purchase goods and services.
D limit their purchases according to government
recommendations.
2. Businesses most frequently participate in the economic
circular flow of resources by 
A buying resources and making products to sell to
consumers.
B providing public goods and services by use of tax dollars.
C providing investment capital to expand.
D consuming products.
3. When the government uses tax dollars to purchase products and/or services from the public, they are participating
A
B
C
D
in what economists consider the 
spread of money.
economic flow.
purchasing of products.
stock purchases.
4. Reinvesting tax dollars into public goods and services shows one aspect of the government’s involvement in the 
A supply and demand curve.
B market equilibrium.
C economic flow.
D consumer product safety.
Standard CE.12c – Private Financial Institutions
Private financial institutions act as intermediaries between ___savers____ and
____borrowers______ that include households and business investors.
Private financial institutions
1. Include ______banks, savings and loans, and credit unions____________________________________
2. Receive ______deposits and make loans_____________________________________________
3. Encourage _____saving and investing by paying interest on deposits____________________________
Standard CE.12d – Global Economy
Virginia and the United States pursue international trade in order to increase ______wealth_______.
Terms to know
____global economy_________: Worldwide markets in which the buying and selling of goods and services
by all nations takes place
Reasons that states and nations trade
1. To obtain goods and services they ______cannot produce or cannot produce efficiently themselves___
_________________________________________________________________
2. To buy goods and services at a ____lower cost or lower opportunity cost_________________
3. To sell goods and services to __other countries_______________
4. To create ___jobs____
___Virginia______ and the _________United States________ specialize in the production of certain goods
and services, which promotes efficiency and growth.
Impact of technological innovations
1. Innovations in technology (e.g., the Internet) contribute to the global flow of ____information,_____
____capital, goods,_____________ and ______services______.
2. The use of such technology also ___lowers the cost of production_________________________.
Standard CE.13a – Marketplace Competition
The government ______________________ and ___________________________ marketplace competition.
Ways the government promotes marketplace competition
1. Enforcing _______________________________________ to discourage the development of monopolies
2. Engaging in _____________________________________
3. Supporting ______________________________________
Government agencies that regulate business
1. FCC (________________________________________________________________) radio, TV, etc.
2. EPA (________________________________________________________________) Clean Air Act
3. FTC (________________________________________________________________) Trade with China
4. These agencies oversee the way individuals and companies do __________________________________.
Standard CE.13b – Public Goods and Services
Government provides certain goods and services that individuals and businesses ______________________
________________ cannot provide efficiently.
Characteristics of most goods and services provided by government
1. Provide benefits to many ___________________________________
2. Would not likely be available if ____________________________________________________________
3. Include such things as ___________________________________________________________________
________________________________________________________________________________________
Ways governments pay for public goods and services
1. Through __________________________________
2. Through borrowed _________________________
3. Through fees (e.g., ________________________________________)
Standard CE.13c – Impact of Taxation
1. The government _____________, __________________, and ____________ to influence economic
activity.
2. Government tax increases ____________________ the funds available for individual and business
spending; tax decreases __________________________ funds for individual and business spending.
3. Increased government borrowing _________________________ available for borrowing by individuals
and businesses; decreased government borrowing ____________________________ available for
borrowing by individuals and businesses.
4. Increased government spending _________________________________, which may increase
employment and production; decreased government spending
____________________________________, which may result in a slowing of the economy.
5. Increased government spending may result in________________________ taxes; decreased
government spending may result in ___________________ taxes.
6. The _________________________________________ to the Constitution of the United States of
America authorizes Congress to tax personal and business incomes.
Standard CE.13d – Federal Reserve System
The Federal Reserve System is our __________________________________________________________.
As the central bank of the United States, the Federal Reserve System
1. Has the duty to maintain the value of the _____________________________________________ (dollar)
2. Regulates banks to ensure the soundness of the _______________________________________ and the
_____________________________________
3. Manages the amount of money in the economy to try to keep ___________________________ low and
__________________
4. Acts as the _______________________________________________________________
Standard CE. 13e – Consumer and Property Rights
1. The United States government _____________________________________________ and creates
_____________________________ to protect consumer rights and property rights.
2. Individuals have the right of private ownership, which is protected
by ____________________________ ________________________________
that are ________________________________________________________.
3. Government agencies establish guidelines that protect ________________________________________
and _________________________.
4. Consumers may __________________________________________________________ of consumer
rights.
Standard CE.13f – Coins and Currency

Money is defined as anything that is generally accepted as a _________________________________
___________________________________.

When the United States government issues coins and currency, people accept it in exchange for goods
and services because they have ___________________________________________________________.

Government ___________________________________ to facilitate this exchange.
The three types of money generally used in the United States are
1. __________________________
2. ____________________________________________
(currency – paper money)
3. ______________________________________________ that can be
accessed by checks and debit cards.
Time To Review…
1. The radio disc jockey on Z104 aired a portion of his/her broadcast that was inappropriate and against the law.
A
B
C
D
Which governmental regulatory agency will most likely levy a fine and/or penalty against the radio station?
Federal Trade Commission
Federal Communications Commission
Consumer Protection Safety Commission
Federal Deposit Insurance Corporation
2. If the state of Virginia decided to buy and sell goods with a foreign company, which governmental regulatory
A
B
C
D
agency would be required to approve the venture?
Environmental Protection Agency
Interstate Commerce Commission
Securities and Exchange Commission
Federal Trade Commission
3.
A
B
C
D
What government regulatory agency monitors television programming?
Federal Communication Commission (FCC)
Environmental Protection Agency (EPA)
Federal Trade Commission (FTC)
North Atlantic Free Trade Organization (NAFTA)
4.
A
B
C
D
What government regulatory agency regulates the disposal of hazardous wastes from hospitals?
Federal Communication Commission (FCC)
Environmental Protection Agency (EPA)
Federal Trade Commission (FTC)
North Atlantic Free Trade Organization (NAFTA)
Standard CE.14 – Personal Finance and Career Opportunities

An awareness of personal talents, interests, and aspirations is needed to select a career.

Attitudes and behaviors that support a strong work ethic enhance career success.

There is a correlation among skills, education, and income.

Changes in technology influence the abilities, skills, and education needed in the workforce.
1. Career planning starts with __________________________________________.
2. Employers seek employees who demonstrate the attitudes and behaviors of a _____________________
_______________________________.
3. Higher skill and/or education levels generally lead to _____________________________________.
4. Supply and demand also influence ______________________________________.
5. Employers seek individuals who have kept pace with __________________________________________
by updating their _______________________.
6. Technological advancements ________________________________________ in the workplace.
7. Technology and information flows permit people to ___________________________________________
_______________________________. This creates ___________________________ from foreign
workers for United States jobs but also may create opportunities for United States workers to work for
companies based in other countries.
8. Being fiscally responsible includes making careful _______________________________________, saving
and _______________________________ for the future, having ___________________________,
keeping to a ____________________, using ___________________ wisely, as well as understanding
how contracts, warranties, and guarantees can _________________________ the individual.
According to the cartoon,
supply and demand can influence –
A individual skills.
B production costs.
C job income.
D competition.