A lesson in nomenclature:
A true shape file is made up of at least three component files.
<name>.shp, <name>.shx and <name>.dbf
The .shp file is the spatial feature class in the form of points, lines, or polygons. The dbf holds the attribute data and the shx is the middle man that indexes the propr record (row) in the dbf with the proper feature.
A lot of people use the term shape file like Kleenex and bandaid. There are other ways to store spatial data as feature classes in a geodatabase. There is a tendency to call these shape files when technically they are not.
A mxd file is often times referred to as a map document. This document holds things like where feature classes are stored, how they are rendered, etc.
My suggestion is to google 'what is GIS' or look at the arcgis help files to get a better perspective of the journey you are about to take.
Please excuse any typos, I'm using an iPhone while riding a high speed commuter train to reply.
Hope this helps.
Hi Joe,
I liked your response to this question and am wondering if you can explain to me what are the benefits to using a file geodatabase as opposed to just using shape files in an .mxd. I will explain, I am creating maps for oil and gas companies, the data I receive is not represented well so I pull it and create my own shape file (Pipelines.shp) this way I can move the lines slightly so they are better displayed on the map and I also add more attribute data. Would it be better if I had this and the other data in a file geodatabase?
Holly