Economics

a. Describe the household function in providing resources and consuming goods and services.

Households or individuals are the final consumers of goods and services produced by the businesses or companies. Households create demand in the market with their personal tastes and preferences.

The company or business produces goods and services that the consumer demands. Therefore, households determine the production of producers or businesses.

Vocabulary: resources, consumer (consumption, consuming), goods, services

b. Describe the private business function in producing goods and services.

Producers create the goods and services that households or consumers, want and need. This is done through innovation and production by small businesses and large corporations. In turn, these companies provide opportunities for wealth to be distributed through employment and through profits, which are obtained by shareholders. Businesses do not produce typewriters anymore because there is not a large market for them.

c. Describe the bank function in providing checking accounts, savings accounts, and loans.

The primary function of banks is to put their account holders' money to use by lending it out to others who can then use it to buy homes, businesses, and other financial demands. Specifically, students should understand that banks provide services that aid our economy. Banks function by safely allowing people and businesses to deposit their savings, on which they can then earn interest. Banks also control our economy’s payment system. Examples of how this is done include the use of electronic payments, direct deposits, and transfers. Students should understand that banks issue loans to both people and companies. Banks make it possible for people to buy homes or start businesses, and for companies to make investments.

d. Describe the government function in taxation and providing certain public goods and public services.

The government’s role is to collect taxes from households and businesses. In exchange, the government provides certain services. Some of these include schools, basic infrastructure like bridges and roads, national security, and public services. The government is also involved in the economy through the regulation and control of private enterprise. This is done to ensure that businesses do not become monopolies and that they serve the best interests of the people.

Competition: In economics, individuals and businesses are engaged in competition. Both entities compete for resources. People compete against each other for jobs, which provides them with an income that is needed to buy goods and services. People then compete in the market place to buy those limited goods and services. People who have greater means can buy more or better goods and services than those with limited means. Businesses also compete for limited resources to produce and provide new goods and services to consumers. Businesses then use these resources to produce goods and services at better prices or faster to consumers. Competition then arises among businesses, which results in consumers having the power to determine a company’s success. If consumers find the goods or services produced by a business to be superior in price or in quality, then they are more likely to buy that company’s product.

Competition in a market will typically drive prices down. Lower prices, obviously, means that more of the good can be sold.

Example: Fast food is relatively inexpensive because there are so many options. If one company tried to raise their prices substantially, they would not get as much business because of the competition.

Markets: The economic market is the physical and virtual exchange of goods and services. In a market economy, businesses attempt to sell goods and services to consumers, while consumers determine exactly what products and services they need. In their research, consumers might look for specific products, or for specific prices. In the market place, goods and services are important. This is because consumers will not participate a market if they do not want or need the product.

Price: The amount a consumer is willing to pay for a good or service or price often determines whether the consumer purchases the product. In markets, price affects both consumers and producers. If the price is too high, producers do not have consumers because consumers wouldn’t purchase the products that they want or need. If the price is too low, consumers will purchase products, but the producer will fail to make profits. Price also relates to competition, because consumers will seek out similar products or alternatives at a lower price if necessary.

Vocabulary: competition, markets, price, consumers, goods, services, products

People “sell” their labor to businesses in return for monetary compensation or wages. This monetary wage allows people who were selling their labor to obtain goods and services that they need or want. While the process seems simple, additional information can be relayed to students that illustrates the relationship between education and income.

Vocabulary: income, labor

A budget helps individuals determine in advance, where they should allocate their finances. Budgets identify expected expenses over a set period, and allow individuals to plan how their income will be used.

Vocabulary: budget, allocate, finances, expenses, income, priorities, spending, saving