Economics -- Week 1, Part A

Supply is the quantity of goods and services that producers offer at various possible prices during a given time period. Profit is the key motivation behind suppliers' behavior in providing goods to the marketplace. The supply of goods can be either elastic or inelastic. VIDEO OBJECTIVES - Explain the difference between supply and quantity supplied - Explain what the law of supply states - Explain what supply schedules and supply curves illustrate - Describe supply elasticity

Scarcity is the basic fact of economic life. Human needs and wants are always greater than the resources available to satisfy them. Thus, choices must ben made concerning how to best use the limited resources available. To make these choices, an economic system or society must answer three basic economic questions. Once an economic system has answered these questions, production must be carried out as effectively as possible. To reach the highest possible levels of productivity, producers may rely on division of labor and specialization. VIDEO OBJECTIVES - Determine why scarcity exists - Identify the issues that producers must address to distribute resources - Explain why producers study productivity

The two motivations for international trade are the fact that it is voluntary and that it creates wealth. International trade encourages individuals and businesses to specialize - to produce a limited number of goods and services - and leads to worldwide interdependence. Specialization may occur because of particular human or national resources unique to a nation. How a nation decides what to produce is determined by absolute and comparative advantage. VIDEO OBJECTIVES - Explain how specialization encourages trade - Explain how absolute advantages can influence economic choices - Explain how comparative advantages can affect a nation's economy

The price system's limitations sometimes lead governments to intervene in the market. Governments may set prices by establishing price ceilings and price floors that are intended to protect producers and consumers from dramatic price swings. Managing prices interferes with the normal interaction between supply and demand, however, and can maintain or even worsen market imbalances. VIDEO OBJECTIVES - Explain why governments sometimes set prices - Explain what governments try to accomplish through price floors, price ceilings, and rationing - Explain what happens when governments manage prices

Money is a key to the economic process. For centuries people have traded and bartered, but the use of money has made more sophisticated transactions possible. Money serves basic functions and has basic characteristics to assist in these exchanges. Societies have historically used different items as money, but regardless of which form money takes it ultimately must satisfy the needs of producers and consumers. VIDEO OBJECTIVES - Explain the functions that money serves - Describe the characteristics that an item must have to be used as money - Identify the sources of money's value - Identify and describe the types of money that are used in the United States