Economics Basics
What is economics?
The study of how people make choices about things that are limited or scarce.
What is a market economy?
A system where buyers and sellers decide what goods are made and sold.
What is an economic decision?
A choice about how to use your money, time, or resources.
What are substitute goods?
Products that can be used instead of each other because they serve the same purpose.
What are complementary goods?
Products that are used together because they go well with each other.
Why do people have to make economic choices?
Because we can't have everything we want.
In a market economy, who decides what to buy?
The buyers decide.
What is one important question to ask yourself when making an economic decision?
Any of these: What do I need vs. want? How much money do I have? What are my choices? Which choice is best for me?
Which pair is an example of substitute goods: pencils and pens, or peanut butter and jelly?
Pencils and pens (they both write; peanut butter and jelly are complementary goods).
Which pair is an example of complementary goods: hot dogs and buns, or apples and oranges?
Hot dogs and buns (they go together; apples and oranges are substitutes).
Give an example of an economic decision you make every day.
(e.g., choosing what to eat, deciding how to spend allowance, picking what toy to buy).
In a market economy, who decides what products to make and sell?
The sellers decide.
Is buying a toy or a snack an example of an economic decision?
Yes, because you have limited money and must choose between two things.
Name two substitute goods that are both fruits.
Apples and oranges.
Name the complementary good that goes with cereal.
Milk.
If you have $5 and want a toy that costs $7, what do you have to do?
Make an economic choice about what to do (you can't afford it, so you must decide whether to save more money, buy something cheaper, etc.).
What two things help determine prices in a market economy?
Supply and demand.
If you want to earn more money, what could you do?
Work extra chores to earn more money.
Why might someone choose butter instead of margarine?
Because of price, taste, or personal preference.
Why do complementary goods work better together than alone?
Because they go well with each other and are often purchased or used together.
What is the main reason economics is important to learn?
It helps us understand how people decide what to buy, make, and use.
Give an example of how supply and demand work in a market economy.
When many kids want to buy a certain toy, the store sells more of it. When fewer kids want a toy, the store sells less of it.
Name two examples of economic decisions you might make at school.
Any two of: choosing between a toy or snack, deciding whether to save or spend allowance, picking which lunch to buy, choosing to do extra chores for money.
If milk is too expensive, what substitute good could you buy instead?
Juice (both are drinks and serve the same purpose).
Give two examples of complementary goods.
Any two of: peanut butter and jelly, shoes and socks, cereal and milk, hot dogs and buns, video game and controller, cookies and milk.