Production, Consumption, and Distribution

Production, Consumption, and Distribution

Four Questions all Economic Systems must address:

1.  What is produced? * Production*

______

Example: ______

______

2.  How should these goods be produced?

a.  Factors of Production:

i.______

(tools, machinery, things a business owns that it could sell for money).

ii.______

(a person who has new ideas and creates new products)

iii. ______

iv. ______

_Combine the factors of Production to ______

______

3.  For whom are the goods and services produced? *Distribution*

______

4.  How many goods and services should be produced? *Consumption*

______

Supply and Demand

l  Scarcity is the inability to satisfy all wants at the same time due to ______

l  Choices must be made as to ______to produce, ______to produce and______will receive what is produced.

l  PRICE: Mechanism to decide who gets goods and services. The amount that satisfies both producers for profit and consumers for value is called ______.

l  Supply and Demand ______through their interaction

l  DEMAND: is the amount of a good or service that ______at a certain price.

l  SUPPLY: is the amount of a good or service that ______

______at a certain price.

Law of Supply:

Law of Demand:

Resources, Scarcity, and Opportunity Cost

Good: ______

Examples: Food, ______, ______

Services: ______

______

Examples: Doctor, ______, ______

Resources: (used in Factors of ______)

·  Natural Resources - ______

·  Human - ______

·  Capital - ______

·  Combine to make ______

Problem: People have ______wants

(Examples: food, clothing, ______) but resources are ______.

Examples of limited resources: ______

Scarcity: ______

______

The needs are greater than the ______.

Since resources are ______, consumers and producers must make ______.

·  Choice: selecting from a set of ______.

Example: ______.

·  Opportunity cost: What is ______when a choice is made.

Example: ______

*Scarcity forces us to ______which needs and wants to satisfy with available resources.
*Scarcity affects decisions concerning ______

______to produce, ______goods and services will be produced and ______will get what is produced

l  Choices involve giving up something to get something. All choices have consequences, both positive and negative.

l  All choices have ______. A good idea is only a good idea if its value is greater than the value of its opportunity cost.