United States History Student Edition

Goods are any products made or grown by people, such as bicycles, jackets, and ears of corn. Services are actions that people perform for others, such as

economic principle that there are not enough resources to meet everyone’s needs and wants. Scarcity requires people and societies to make choices. The choices that societies make involve a cost that economists call opportunity cost. The opportunity cost of something is what you give up to make it or buy it. Suppose you are a farmer. You choose to grow wheat on your land. You spend time and resources—your land and the money to buy seeds—to grow the wheat. While you are growing wheat, you cannot use those resources to grow beans. You are giving up the chance to grow something else when you grow wheat. Beans are the opportunity cost of growing wheat. People are always weighing the opportunity costs of their choices about what to make or buy. Supply and Demand Getting the resources needed to produce a good or service is a first step to providing that good or service. Next, you need to know how much of that good or service to offer. You will also want to decide how much money to charge for the good or service. These decisions are affected by the laws of supply and demand. Supply is the amount of a good or service that a producer wants to sell. The law of supply says that the higher the price you can charge for a good or service, the more of it you will want to sell. Demand is the amount of something that a consumer wants to buy. The law of demand says that the lower the price of a good or service, the more of it people will want to buy. In a free market, such as the economy of the United States, the seller and buyer will agree on a price and amount that satisfies both. Trade and Barter Two countries trade with each other when both sides can gain something from the exchange. Exports are goods shipped out of a country and sold somewhere else. Imports are the goods and services that a country buys from other countries. demand the amount of something that a consumer wants export a good sent from one country to another in trade import a good brought into a country from another country

cutting hair, repairing cars, or teaching. Resources and Scarcity

In order to make goods and provide services, people must use resources. There are four major kinds of resources. • Land includes the surface of Earth and the Earth’s natural resources, such as minerals and water. • Labor is the human activity of making goods and providing services. • Capital is money and goods used to help people make or do things. You need capital to run a business. • Entrepreneurship (ahn•truh•pruh•NUHR•shihp) is the act of running a business and taking on the risks of that business. Entrepreneurship usually describes individual or small businesses. What do societies use these resources to make? In making these decisions, societies have to make choices. The reason is that all societies face the problem of scarcity . Scarcity is the

As this image shows, farming in the United States in the 1800s was made easier by the invention of agricultural machinery.

scarcity the principle that there are not enough resources to meet everyone’s needs and wants opportunity cost what is given up, such as time or money, to make or buy something supply the amount of a good or service that is available

The Print Collector/Alamy Stock Photo

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