Supply & Demand - Faculty.utep.edu

l1ongraduates, and college graduates make evenmore than high school graduates. Educationalinvestments require that we make a sacrifice today sowe can have a better life in the future-and fewinvestments generate higher returns.Investing in the FutureBusinesses, government, and other organizationsface many of the same choices that individualsdo. Investments in human capital and physicalcapital can eventually increase production and promoteeconomic growth. Faster economic growth,in turn, increases the amount ofgoods and servicesavailable to us.Economic IinterdependenceThe American economy has a remarkable degreeofeconomic interdependence. This means that werely on others, and others rely on us, to provide thegoods and services that we consume.Events in one part of the country or the worldoften have a dramatic impact elsewhere. To illustrate,a labor dispute between several hundred professionalbasketball players and a handful of owners can affectFirst and Biggest The world's first programmablecomputer, the Electronic Numerical Integrator andComputer (ENIAC), was developed in 1946. Standingalmost 10 feet tall and 80 feet wide, ENIAC couldperform up to 5,000 operations per second. Personalcomputers today easily outperform ENIAC.the lives of tens of thousands of people who parkcars, sell tickets, serve food at the games, and sellNBA apparel and memorabilia all across the country.Or, bad weather in countries where sugar cane isgrown can affect sugar prices in the United States,which in turn can affect the price of snack foods andthe demand for sugar substitutes elsewhere.This does not mean that economic interdependenceis necessarily bad. The gain in productivityand income as a result of increased specializationalmost always offsets the costs associated with theloss in self-sufficiency. However, we need to understandhow all the parts fit together, which is onereason why we study economics.Checking for Understanding1. Main Idea Using your notes from the graphicorganizer activity on page 12, explain thedifferent transactions that take place in theproduct market.2. Key Terms Define economic product, good,consumer good, capital good, service, value,paradox of value, utility, wealth, market,factor market, product market, economicgrowth, productivity, division of labor,specialization, human capital, economicinterdependence.3. Discuss the relationship among scarcity, value,utility, and wealth.4. Describe the circular flow of economic activity.5. Explain why productivity is important to economicgrowth.Applying Economic Concepts6. Specialization Provide at least three exampleseach of specialized workers and capital thatare used in your school to prOVide the serviceof education. Would productiVity go up ordown if these specialized capital goods andworkers were not available to your school?Explain why or why not.7. Making Comparisons What is the differencebetween a durable good and a nondurablegood)8. Drawing Conclusions In what way do businessesand households both supply anddemand in the circular flow model?Practice and assess key sodal studies skills withthe Glencoe Skillbuilder Interactive Workbook,Level 2.CHAPTER L WHAT IS ECONOMICS' 17