Scarcity

o A lack of supply, or
o The inability to meet wants or needs

Opportunity Cost

o What you have to give up
o To get what you want
What is a Consumer?
o A person that uses economic goods…
o in order to satisfy …
o his or her wants and needs

o Who are consumers?

What is a Producer?
o A person or group…
o that creates goods and services…
o to meet the wants and needs
o of the public

o Who are Producers?
Get this down:
o In a free enterprise system,
o the law of supply and demand
o operates freely

Supply (a definition):
o The quantity of a good or service...
o offered for sale …
o at a certain price
Law of Supply
o As the price of a product increases...
o .producers will produce more
Supply Graph

What do prices tell producers?
o What is the cost? (to the producer)
o What is the benefit? (to the producer)
- What's an economic term for benefit?

Demand (a definition):
o The number of items of a product…
o that consumers are willing and able…
o to purchase at a certain price

Law of Demand

o As prices rise,
o consumers will demand less.

Demand Graph

Why do rising prices created less demand?
o 1. Limited resources
o 2. Choices must be made
o 3. Opportunity Cost
In other words...
o The price of a product...
o tells the consumer…
o how much they value the product

o Which is why producers are most interested in Opportunity Cost choices people make.

Competition in the Market
o As prices increase…
o other suppliers begin producing…
o which creates a SHIFT in supply

What's the Market Price
o Market Price is created …
o When supply and demand meet (creating equilibrium)

o Market price can be graphed ...