A system of change and exchange. Why do we exchange things?

To get things we want/needWhat are wants/needs?Needs-Things required for survival (Food/clothing/shelter/water)Wants-Things not required, but desired

Some things are easier to get than others

How easy it is to get something is based on “Scarcity”

The more scarce something is, the harder it is to get.Things can become scarce in two

ways There are not a lot of them People hold onto their things so that

they aren’t available

In order for things to be bought and sold, you need two kinds of people

Producers/suppliers-People who make a product

Consumers/demanders-People who use a product

Producers never make something they think will lose them money

Consumers will never buy something they think will not make them happy

People making something have to decide how much other people want it. That is called the demand.

Based on how many people want something, people will start to make it. That is called supply.

Where supply and demand come together determines price.

Producers offer “Goods” or “Services”

Consumers can buy “Goods” or “Services”

A good is a physical thing that can be purchased in an economy (food, a car, a toy, etc.)

A Service is an act someone is willing to do for money (car wash, pedicure, shoe shine, etc.)

To produce things, you can use four different resources.

Resources are the building blocks of an economy (things used to make something else)

Land/Natural resources Labor/Human resources Capital Entrepreneurship