(GED Social Studies/Economics; lesson 1) – Basic Economics Concepts

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                                   BASIC ECONOMICS CONCEPTS

Capital is a term or material (it could be the investment of building, land and equipment) use for producing income. In economics, capital on its own can’t bring income, but needs labor to transform the capital and materials into goods and services.

Markets are established network where sellers communicate with buyers based on goods and services. There are market that deal with selling of raw materials to the producers. There are also retail and wholesale markets for consumer. Markets are being regulated by law to some extent.

Supply and demand affect the price of goods and services. The higher the supply of goods and services the lower the price. These will make consumer to shop for the lowest price as possible. But if the demand of goods and services is high and the supply is low. Then the price becomes high. Supply and demand usually affect price in a free market. In United States they operate primarily on a free market, but not completely on a free market. Governmental price support helps in controlling price.


  1. From the passage, capital on its own can’t produce value but needs what?

A. Enhancement

B. More capital

C. More materials

D. Labor

Ans= D

2. Producer makes use of?

A. Finished goods

B. Materials

C. Raw materials

D. Any materials

Ans= C

3. Price of goods and services is control by?

A. Governmental control price

B. Supply

C. Supply and demand

D. Producers

Ans= C