Chapter 3/Lesson 2Trade Then

And Now

Lesson Main Idea

People trade for the goods and services that

they need and want.

Vocabulary Words

1. need- something that a person must have to live.

2. want- something that a person would like to have but can live without.

3. barter- to trade one kind of good or service for another.

4. producer- a person who makes goods to sell or provides services.

5. consumer- a person who buys goods or services.

6. free enterprise system- a system in which businesses have the right to make any goods or provide any services they want.

7. profit- the money a business has left over after all costs are paid.

8. supply- the amount of an item that sellers are willing to offer at different prices.

9. demand- the amount of an item that consumers are willing to buy at different prices.

10.opportunity cost- what you give up when you choose one thing over another.

11. economy- the way in which the resources of a country, state, region, or community are managed.

Wants and Needs

Make a T-chart listing wants and needs.

Trading for Needs and Wants

People began trading because there were goods and services they needed or wanted. In the past, people used bartering to trade one kind of good or service for another.

Read page 73

Questions1. What basic needs did people trade for in the

past? Food, clothing, and shelter

2. Would you classify popcorn as a need or want? Why? A want; Popcorn is something a person would like to have but can live without.

3. How might you obtain a good or service if you did not have any money? You could barter(trade) for it.

4. Describe a time when you have bartered with a friend.

Using Money

The Egyptians, Greeks, and the Chinese began using money thousands of years ago. Today consumers use paper bills, metal coins, and checks to buy products and services.

Read page 74

Questions1. Who invented the type of money we

use today? The Greeks invented the first coins, and the Chinese invented paper money.

2. Why do you think people need money?

To buy the things they need and want

3. How do producers decide on a price at which to sell their products? They decide on a price that covers their costs and gives them a profit and that they think the consumers are willing to pay

Review:

Tell the difference between a producer and a consumer.

Free Trade

The economy of the United States is based on the free enterprise system. To make a profit, businesses sell goods or services.

Read page 76-77

Questions:1. What costs are included in the price of a

product? The costs of the natural resources, machinery, and the workers used to make the product.

2. Why might a company sell a shirt for $25.00 when it costs $15.00 to make it? The company wants to make a profit

3. Why is it important for a business to make a profit? So that business owners can improve the business and buy the things they need and want.

The Amount of a Product

In a free enterprise economy, the price of a product is based on the supply and demand for that product.

How might an increase in supply benefit a customer?

Making Choices

People have to make choices about what to buy with their money. An opportunity cost is what people give up when they choose to buy one thing over another. Read page 78