When you place a graphic, you see a visual representation of the file in your document so that you can view and position it, but the actual source image file may be either linked or embedded.
 

• Linked images are connected to, but remain independent of, the Illustrator document.  When you export or print, the original graphics are retrieved, creating the final output from the originals. It also means that when you would hand in the Illustrator file, you would also have to hand in all separate image files as well, since they are only displayed in the document, but actually remain separate from the document. One use for this scheme would be a catalog where photos of the products are regularly updated as the products are improved. Every time you would open the Illustrator catalog document, the most recent linked photos would appear automatically (as long as they were always saved with the same filenames).
   
• Embedded images are copied into your document at full resolution. As long as the artwork is embedded, your document is self-contained. That means you can hand it in without having to also hand in the separate image files.

To embed an image (either your scanned drawing for the midterm project or the required images for your final project):

• Choose File > Place to place an image into your document.
• In the resulting dialog box, find the image you want and click on it once to select it.
• Under the "Files of type:" area you will see the word "Link" with a checkbox next to it. If the checkbox is checked, the image will only be linked to your document but not embedded -- therefore, uncheck the "Link" box so that it's empty to embed the image you are selecting into your document.
• Click the "Place" button to insert your image into your document.
• In your document, click on the image to select it.
• Look in the Control panel at the top of the document screen -- if the "Embed" button is greyed out and unselectable, your image is properly embedded.
• If you accidentally left the "Link" box checked when you placed the image, the "Embed" button in the Control panel will be active -- click it to embed the image.
• Choose Window > Links to display the Links panel -- you will see a list of your images. All embedded images will have a small icon next to the image name -- if you don't see the icon it means your image is not correctly embedded, but is only linked. Select the image name and click the "Embed" button in the Control panel to embed it.
• Another way to tell if an image is properly embedded:
  • when you click on a properly embedded image in your document, there is no "X" across it
  • when you select an image that is only linked but not embedded, there is an "X" across it from corner to corner.