Chapter Overview

~ •

i ²social science that analyzes

the choices made by people and
governments in allocating scarce resources.

c

 •

i 
~ i r
e

i ²study of small economic
units, such as individual consumers, families,
and businesses.
~ a r
e

i ²study of a nation¶s
overall economic issues, such as how an
economy maintains and allocates resources
and how government policies affect the
standards of living of its citizens.

c
 i r
e

i 
he F
r e
 Dea a Supply

~ Dea²willingness and ability of buyers to

purchase goods and services.

~ Supply²willingness and ability of sellers to

provide goods and services.

cc
 Fa t
r Drivi Dea
~ •ach person must choose
Between saving and spending
How to allocate spending

c
 Fa t
r Drivi Dea

~ Dea Curve
Graph of the amount of a product that
buyers will purchase at different prices
Demand curves typically slope downward
and to the right, meaning that lower prices
attract larger purchases

c
~ Dea Curve 
r Ga
lie

c
~ •
pe te Shit i Dea Curve

c
 Fa t
r Drivi Supply
~ Businesses must chose how to use their
resources to obtain the best profits

~ Supply Curve
½hows the relationship between different
prices and the quantities that sellers will
offer for sale, regardless of demand

c
~ Supply Curve 
r Ga
lie

c
 Fa t
r Drivi Supply
~ entral role in determining the overall supply
of goods and services is played by factors of
production
Natural resources
Human resources
Physical facilities
•ntrepreneurship

c

~ •
pe te Shit i Supply Curve

c


 
w Dea a Supply Itera t

~ ½eparate shifts in demand and supply have

obvious effects on product price and
availability

~ •uilibriu pri e

c