Grades K, 1, 2, 3, 4

Scarcity

Decision Making

Allocation

Incentives

Trade

Specialization

Markets and Prices

Role of Prices

Competition and Market Structure

Institutions

Money and Inflation

Income

Entrepreneurship

Economic Growth

Role of Government and Market Failure

Unemployment and Inflation

People make choices because they can't have everything they want.

Economic wants are desires that can be satisfied by consuming a good (an object), a service (an action), or a leisure activity.

People's choices about what goods and services to buy and consume determine how resources will be used.

Whenever a choice is made, something is given up because resources are limited.

The opportunity cost of an activity is the value of the best alternative that would have been chosen instead. It includes what would have been done with the money spent and the time and other resources used in undertaking the activity.

Productive resources are the natural resources, human resources, and capital goods available to make goods and services.

Natural resources, such as land, are "gifts of nature;" they are present without human intervention.

Human resources are the people who do the mental and physical work to produce goods and services.

Capital goods are goods that are produced and used to make other goods and services.

Human capital refers to the quality of labor resources, which can be improved through investments in education, training, and health.

Most people produce and consume. As producers they help make goods and services; As consumers they use goods and services to satisfy their wants.

Choices involve getting more of one thing by giving up something else.

A cost is what you give up when you decide to do something. A benefit is what satisfies your wants.

No method of distributing goods and services can satisfy all wants.

There are different ways to distribute goods and services (by prices, command, majority rule, contests, force, first-come/first-served, sharing equally, lottery, personal characteristics, and others), and there are advantages and disadvantages to each.

Rewards are positive incentives that make people better off.

Penalties are negative incentives that make people worse off.

Both positive and negative incentives affect people's choices and behavior.

People's views of rewards and penalties differ because people have different values. Therefore, an incentive can influence different individuals in different ways.

Exchange is trading goods and services with people for other goods and services (called barter) or for money.

The oldest form of exchange is barter, the direct trading of goods and services between people.

People voluntarily exchange goods and services because they expect to be better off after the exchange. This also may include the more informal exchanges of favors and courtesies.

Economic specialization occurs when people concentrate their production on fewer varieties of goods and services than they consume.

Division of labor occurs when the production of a good is broken down into numerous separate tasks, with different workers performing each task.

Specialization and division of labor usually increase the productivity of workers.

Greater specialization leads to increasing interdependence among producers and consumers.

A price is what people pay when they buy a good or service, and what they receive when they sell a good or service.

A market exists whenever buyers and sellers exchange goods or services.

Higher prices for a good or service provide incentives for buyers to purchase less of that good or service, and for producers to make or sell more of it. Lower prices for a good or service provide incentives for buyers to purchase more of that good or service, and for producers to make or sell less of it.

Competition takes place when there are many buyers and sellers of similar products.

Banks are institutions where people save money and earn interest, and where other people borrow money and pay interest.

Saving is the part of income not spent on taxes or consumption.

Money is anything widely accepted as final payment for goods and services.

Money (currency, coins, or checks) makes trading easier by replacing barter.

People consume goods and services, not money; money is useful primarily because it can be used to buy goods and services.

Producers use natural resources, human resources, and capital goods (not money) to make goods and services.

Inflation is an increase in most prices; deflation is a decrease in most prices.

Labor is a human resource that is used to produce goods and services.

People can earn income by exchanging the use of their labor (physical or mental work) for wages or salaries.

Entrepreneurs are individuals who are willing to take risks, to develop new products, and start new businesses. They recognize opportunities, like working for themselves, and accept challenges.

Entrepreneurs and workers often are innovative. They attempt to solve problems by developing and marketing new or improved products and processes.

When workers learn and practice new skills they improve their productivity by improving their human capital.

Workers can improve their productivity by using physical capital such as tools and machinery.

Governments provide certain kinds of goods and services in a market economy.

Governments pay for the goods and services they use or provide by taxing or borrowing.

Unemployment exists when adults can't find jobs.