STEP 10 ECONOMICS REVIEW

Economics is…

• The study of money & businesses

The economic problem is SCARCITY which means…

• People have UNLIMITED WANTS but there is a LIMITED AMOUNT OF RESOURCES: GOODS & SERVICES (stuff, including money, cars, clothes, food, houses)

The opposite of scarcity is called ABUNDANCE

• When there is more than enough goods/services for the current DEMAND there is ABUNDANCE

There are two types of RESOURCES or STUFF that you can buy

• GOODS = are PHYSICAL STUFF – Car, house, money, food, shoes, computers,

phone, money

• SERVICES = are NON PHYSICAL STUFF– Car wash, lawn care, snow removal, babysitter,

room service, hair cut, the phone plan, insurance

NEEDS

• NEEDS are goods or services that are essential to life

• WATER, FOOD, SHELTER, CLOTHING

WANTS

• Wants are the goods or services that are NOT essential to life, but that are extras or luxuries

• Sporting events, a bigger car, a bigger house, more money, specialized foods, bottled water, clothing accessories,

When it comes to price…

1. If the WANT (DEMAND) is greater than SUPPLY (RESOURCES) than price goes UP OR DOWN?

2. If the WANT (DEMAND) is less than the SUPPLY (RESOURCES) than price goes DOWN