Lesson 1.docx

Lesson 1: The Foundations of Economy Revision - Producers, such as farmers or factory workers, are the people who make or grow goods. - Consumers, such as students and parents, are those who buy and use those goods. - Goods can be made or grown, such as toys, books, and food. - Services involve doin...

Lesson 1: The Foundations of Economy Revision - Producers, such as farmers or factory workers, are the people who make or grow goods. - Consumers, such as students and parents, are those who buy and use those goods. - Goods can be made or grown, such as toys, books, and food. - Services involve doing things for others, such as teaching, nursing, or cutting hair. A. What is Economy? Economy is the term used to describe the system of production, distribution, and consumption of goods and services in a society or a country. An economy is a way to understand how people make, trade, and use things. B. Supply and Demand When people have desires for something, it creates a demand for it. And when producers see that people want it, they make more of it to meet the demand. The prices of goods can vary depending on their demand and availability. If there is a limited quantity of something in high demand, the price may be higher. Understanding supply and demand can help you better understand how the economy works. Imagine yourself running a lemonade stand. Demand is the number of people who want to buy your lemonade, and supply is the quantity of lemonade that is available for sale. If many people want to buy your lemonade, it means there is a high demand. However, if you only have a small amount left to sell, this is called low supply. In this case, you can increase the price because people really want it and are willing to pay more. On the other hand, if not many people want to buy your lemonade (low demand) and you have a lot of lemonade to sell (high supply), you might have to lower the price to sell it all because not many people are interested in buying it. Why do prices change? Why are some products more popular than others? To answer these questions, we need to discuss the factors that influence supply and demand. C. Factors Affecting Supply: Cost of Production: Companies may not produce as many products if it is expensive to make them, which can lead to a decrease in supply. Technology: When technology makes production easier, more items can be produced. Government Regulation: How much companies can produce and sell depends on the laws and rules set by the government. Number of Sellers: The quantity of a product will increase if there are more companies selling it. D. Factors Affecting Demand: Consumer Income: When people have more money to spend, they may buy more of a product, which results in an increase in demand. Price of Related Goods: When a product has a cheaper substitute, people may choose to buy less of the more expensive product, which reduces demand. Tastes and Preferences: The demand for something may increase if it becomes popular, leading to more people wanting to buy it. Advertising: Companies use advertising to convince people they need products, which can lead to an increase in demand. What Do I need to raise the demand of my lemonade? Good Taste Attractive Advertisement