Economics Basics — Answer Key
Part A: Fill in the Blank
Write the missing word or number on each line.
1. When a store runs out of an item, the supply is low.
Supply tells how much of an item is available. When a store runs out, there is very little left, so the supply is low.
2. Putting coins into a piggy bank is an example of saving.
Coins added to a piggy bank are not being spent on anything yet, so the money is being saved. Saving means setting money aside for the future.
3. A dentist who cleans your teeth provides a service.
A dentist does work on your teeth to keep them clean and healthy, but you do not take an object home. Helpful work done for another person is called a service.
4. If everyone wants the new toy, demand for it goes up.
Demand grows whenever lots of people want the same thing at once. If everyone is asking for a new toy, demand for that toy goes up.
5. A factory that makes pencils is a producer of goods.
Factories take materials and turn them into items like pencils for people to buy. Anyone or anything that makes goods to sell is a producer.
6. The thing you give up when you choose something else is the opportunity cost.
Choosing one thing means saying no to another, and the option you give up is called the opportunity cost. It reminds us that every choice has a tradeoff.
7. A family that buys groceries at the store acts as consumers.
When people exchange money for groceries, they are buying goods, and buyers are called consumers. A whole family shopping at a store acts as consumers together.
8. Toys and candy are examples of wants because you can live without them.
Toys and candy are nice to have, but no one needs them to stay alive, so they are wants. Wants are extras, while needs are things you cannot live without.
9. Using your allowance to buy a snack is called spending.
Using your money to pay for a snack is spending. Spending happens any time you trade money for a good or service.
Part B: Matching
Match each item on the left to the correct answer on the right.
1. Match each item to its correct answer.
A warm winter coat.
→ Need (clothing)
Want
A new video game.
→ Want
Need (clothing)
A haircut at a salon.
→ Service
Need (water)
A glass of clean water.
→ Need (water)
Service
A warm winter coat keeps a person from getting too cold, which makes it a need for clothing. A new video game is fun but not necessary to live, so it is a want. A haircut is helpful work done by another person, which makes it a service. A glass of clean water is something every body must have to survive, so it is a need for water.