ECONOMICS DAY 2 Introduction to Business Marketing REVIEW

ECONOMICS - DAY 2 Introduction to Business & Marketing

REVIEW What is Economy? What are Resources? What are Factors of Production? � Land � Labor � Capital � Entrepreneurship

ACTIVITY Identify each of the following with appropriate Factor of Production: land, labor, capital, entrepreneurship 1. You plan to make and sell custom skateboards. 2. Both you and your friend have part-time jobs at a woodworking factory. 3. You will decorate the boards by using dried leaves. 4. You have been able to buy materials for 15 boards.

ACTIVITY ANSWERS Identify each of the following with appropriate Factor of Production: land, labor, capital, entrepreneurship You plan to make and sell custom skateboards. - entrepreneurship 2. Both you and your friend have part-time jobs at a woodworking factory. - labor 3. You will decorate the boards by using dried leaves. - land 4. You have been able to buy materials for 15 boards. - capital 1.

HOW DOES AN ECONOMY WORK There are three fundamental economic questions: 1. What goods & services should be produced? 2. How should goods & services be produced? 3. For whom should goods & services be produced?

TYPES OF ECONOMIES Market Economy – no government involvement Command Economy – government makes all decisions Mixed Economy – combination of Market and Command

MARKET ECONOMY There is no government involvement in economic decisions WHAT: consumers decide what to produce goods & services HOW: businesses decided how to produce goods & services FOR WHOM: the people with more money are able to buy more goods & services

COMMAND ECONOMY Government has complete involvement in economic decisions WHAT: one person (dictator) decides what to produce goods & services HOW: the government owns ALL means of production and runs all businesses FOR WHOM: the government decides who receives goods & services

MIXED ECONOMY Combination of Market & Command economy � USA is a Mixed Economy WHAT: the people & government decide together what to produce goods & services HOW: the people & government decide together how to produce goods & services FOR WHOM: the people & government decide together who receives the goods & services

HOW TO MEASURE AN ECONOMY? Economic indicators that measure an economy: � Productivity: output per worker hour measured over period of time � Gross Domestic Product (GDP): output of goods & services produced by labor � Standard of Living: level of material comfort in terms of products available to a group of people � Consumer Price Index (CPI): measures change in price over a time period � Consumer Confidence: degree of optimism that consumers feel about the overall state of the economy � Unemployment Rate: percentage of workforce that is unemployed at any given date

WHAT MAKES A HEALTHY ECONOMY? The characteristics of a healthy economy are: � high productivity � stable prices � low unemployment