Unit 8: Economic Systems, Principles, and Concepts
Unit SOLs:
  • People make choices about how to use limited resources, decide the ownership of resources, and structure markets for the distribution of goods and services.
Study Maps for Economics Terms: Econ Vocab
Study Maps for Economics Terms Part 2: More Terms

  • Every country must develop an economic system to determine how to use its limited productive resources.
  • The key factor in determining the type of economy a country has is the extent of government involvement.
Study Map for Economic Systems: Systems
  • The United States economy is primarily a free market economy; but because there is some government involvement it is characterized as a mixed economy.
Study Map for U. S. Economy: U. S. Economy
  • Government intervenes in a market economy when the perceived benefits of a government policy outweigh the anticipated costs.

Unit Vocabulary:
Scarcity: inability to satisfy all wants and needs at the same time. Requires choices to be made. Scarcity Llink
external image Scarcity.png

Choice: selecting an item from a set of possible alternatives. Choice Link

The tyranny of choice

You choose:

If you can have everything in 57 varieties, making decisions becomes hard work.

Opportunity cost: what is given up when a choice is made. Highest value foregone. Opportunity Cost Link

Resources: factors (items) used in the production of goods and services.


Incentives:things that incite or motivate. They are used to change economic behavior.

Supply and demand:the interaction of these determines price. Supply is the amount producers are willing and able to sell at a certain price. Demand is the amount consumers are willing and able to buy at a certain price.
Supply and Demand illustrated in the movie, "Jingle All the Way." (Link to description: Jingle Link)

Elasticity in "Jingle All The Way"

by Dirk Mateer

This amusing comedy features two fathers who procrastinate until Christmas Eve to try to buy a Turbo Man action figure for their children for Christmas morning. It’s the only present that their kids truly want from Santa. The problem is that almost every child in America feels the same way. Thus, the Turbo Man toys are in short supply due to strong demand. However, related items, like Turbo Man’s pet, Booster, are readily available.

Based on this description, what can we say about the price elasticity of demand for Turbo Man and Booster?

Turbo Man – Since the toy is needed immediately, no good substitutes exist. Also, because the amount this toy costs (the share of the budget) is relatively small, people are not as concerned about getting a good deal and demand is, therefore, relatively inelastic. We see this in the movie when a toy store receives a last minute shipment of the action figure and a crowd of shoppers shows up.

Booster – If you cannot find a Turbo Man action figure you are not likely to want his pet, Booster. Therefore the demand for Booster is much more elastic than Turbo Man since there are many good substitutes for Booster. We see this in the movie when a toy store sales associate informs the crowd of would-be Turbo Man buyers that the store has plenty of Boosters available, and the throng yells back, “we don’t want it.”

Production: combining resources to make goods or provide services.

Consumption: buying or using a good or service.

Traditional economy: type of economy where the production and distribution of goods and services is based on customs. Focus is on meeting needs more so than wants.
Command economy: type of economy with the highest level of government control. Property / resources are owned by the government.
Free market economy: type of economy with the least amount of government control. Property / resources are owned by individuals and businesses.

Mixed economy: Most common type of economic system. Economic decision making is shared by individuals, businesses, and the government

Central planning: person or small group which determines the needs of a larger community. Usually in a command economy.

Consumer sovereignty: making products based on the purchases made by consumers.

Profit: earnings after all expenses have been paid.

Private property: property owned by individuals or businesses, not by the government.


Economics Games:
1. Concepts mini quiz Quiz
2. Economics Fling Fling
3. Millionaire Game Rags to Riches
4. Vocabulary #1 Vocab
5. Vocabulary #2 Vocab 2
6. Vocabulary Hangman Hangman
7. Supply and Demand Game Online Game
8. More Econ Fling Econ Fling