What Is? is a social science devoted to the study of markets. looks at the way society uses resources to make goods and services and then distributes

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Chad Robert Dixon
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1 ECONOMICS

2 What Is? is a social science devoted to the study of markets. looks at the way society uses resources to make goods and services and then distributes these goods and services to the human population. Think about the term social science. What constitutes a social science? What makes a social science different from a hard science, such as biology? Write your thoughts below. 1

3 Related Social Sciences There are other social sciences that connect with economics. For example, economics can tell us something about factors that have driven historical events. History as a study often uses concepts from economics to explain issues such as the causes of a war, a country s population growth or decline, and an upheaval or revolution in a country s government. Following is a list of social sciences. How are concepts from economics used for the study of each social science? Use an example from each social science to explain your answer. a. political science b. sociology c. history 2 d. anthropology

4 Law of Demand Vocabulary Match each term with its definition. Write the correct letter on the line. 1. law of demand 2. equilibrium 3. normal goods 4. substitute goods 5. complementary goods a. As income increases, these goods are bought in larger amounts (and vice versa). b. The price of a product is inversely related to the quantity demanded. c. Closely related goods: An increase in price for one will lead to an increase in demand for the other (and vice versa). d. Closely related goods: An increase in price for one will lead to a decrease in demand for the other (and vice versa). e. Quantity demanded and quantity supplied are equal at this price. 37

5 Law of Demand Imagine the following scenario: The price of a new CD is presently $17. You are willing to buy 2 CDs per month at that price. Your friend Leo, a big music fan, is willing to buy 5 CDs per month at that price. Your other friend, Sonia, will not pay $17 for a CD. Even though she prefers the sound quality of CDs, she decides to download music rather than pay a price of $17, even for just 1 CD. Now, imagine that the price of CDs goes down to $15 each, and every other factor remains the same (ceteris paribus). Write another scenario for you and your two friends that illustrates the law of demand. 38

6 Consumer Demand Schedules The table below shows the number of CDs that you and your friend Leo are willing to buy at different prices. Using the tables, draw the individual demand graphs for you and Leo. You Price Quantity Leo Price Quantity

7 Taxation and Social Issues Governments typically levy a sin tax on items such as cigarettes and alcohol. Read the scenario below, and then answer the questions that follow. Rosario and Dylan both smoke two packs of cigarettes a day. They are the same age. Rosario grew up in a wealthy household, went to private schools, attended college, and now works at a job paying $150,000 per year. Dylan grew up in a poor household, could not afford college, and went to work at a low-paying job right after high school. He works for $25,000 per year. 1. Governments establish sin taxes for two reasons: inelasticity of demand and deterrence. Explain Are sin taxes fair? Why or why not?

8 GDP and Growth Vocabulary Match each term on the left with its definition on the right. Write the correct letter on the line. 1. GDP (gross domestic product) 2. nominal GDP 3. real GDP 4. CPI (consumer price index) 5. aggregate supply 6. aggregate demand a. method of comparing the prices of goods and services in a given year to a base year b. all the goods and services in an economy that firms are willing to supply at different prices c. the value of all the goods and services produced in a given year 134 d. all of the goods and services that people in a given economy demand e. GDP measured in current prices f. GDP measured after being adjusted for price changes

9 Low Income, High Birth Rate Less-developed countries are often characterized by having low income rates and high population growth rates. Answer the following. 1. Many African countries are considered to be less-developed. Why does a high population growth rate contribute to the problem of low per capita income? How does the AIDS pandemic affecting some of the same countries make the problem even worse?

Macro Unit 1b. This is what we call a demand schedule. It is a table that shows how much consumers are willing and able to purchase at various prices.

Macro Unit 1b. This is what we call a demand schedule. It is a table that shows how much consumers are willing and able to purchase at various prices. Macro Unit 1b Demand Market: an institution or mechanism, which brings together buyers ("demanders") and sellers ("suppliers") of particular goods and services. Notice that the remainder of this unit assumes