Unit Two Economics in Louisiana Economics in Louisiana

Unit Two Economics in Louisiana

Economics in Louisiana • Economics is the study of the producing, disturbing, and consuming of goods and services. • A person who studies the economy is called and economist. • Economist seek to understand the way communities, societies, or countries address the issue of scarcity and decide how to allocate limited resources.

Four Questions • There are 4 fundamental questions of economics that must be answered in order for every type of economy to function.

Four Questions • What is being produced or offered? • How will it be produced or offered? • How much should be produced or offered? • For whom will it be produced? (Who will buy the product or service? )

All Write Round Robin Terms to Know • Goods • Service • Consumer • Producer • Resources • Supply • Demand • Trade off • Scarcity • Opportunity Cost

Three Types of Economy • The three economic system models are traditional economy, command economy, and market economy.

Traditional Economy • Three aspects help to define a traditional economy: • 1 st heavily dependent on agriculture • 2 nd the people tend to barter • 3 rd economic decisions often based on traditions

Traditional Economy • Underdeveloped nations (countries) may follow this system • The four economic questions are answered by customs or traditions • Jobs are handed down from father to son • Men and women have different kinds of jobs.

Traditional Economy in Louisiana • Before the French settled Louisiana , the Native American groups had a traditional economy. • They hunted and engaged in agriculture. • They also bartered with other groups. Their customs beliefs and repeated patterns of behavior helped guide decisions about what had value and what was fair in the course of economic exchange.

Command Economy • The government directs the economic system and tries to control how producers answer the four basic economic questions • The government makes rules and regulations that control what is produced and how and where it is produced • Government mandated controls also affect people’s access to economic goods

Command Economy • Communist government use this system • The government officials decide how to answer the four basic economic questions

Command Economy in Louisiana • At the time Louisiana was established, a king ruled France. This kind of government was called a monarchy. • Beginning in 1700, the French king and his advisers made detailed plans for how they wanted Louisiana’s economy to develop so that it would enrich France. • Their schemes were not successful, but their plans provide an example of how a commend economy functions.

Market Economy • In a market economy, economic decisions are made at an individual level. • The four basic economic questions are answered by the producers based on their beliefs about how consumers will respond to what they produce • Supply and demand influence what is produced and how it is produced

Market Economy • The USA and most of the western world operates in this way • Also called the free enterprise or capitalist system • People own property, operate businesses, and make key decisions about the four questions of economics • Government regulates to ensure fair business practices and safety of workers and consumers

Check on Learning • Describe three kinds of resources that help consumers satisfy their needs and wants • What does scarcity mean? • What is an opportunity cost? • What is the difference between a consumer and a producer?

Factors Of Production • Land • Labor • Capital

Factors of Production: Land • Refers to all natural resources used to produce goods and/or services • These resources include but are not limited to: • Oil, coal, iron, water, forests

Factors of Production: Labor • Labor is the effort people devote to tasks for money • Labor includes by is not limited to: • Medical care provided by a doctor • Instruction provided by a teacher • Repair of a television by a technician

Factors of Production: Capital • Refers to any human-made resource that is used to produce other goods and/or services • Economy requires both human and physical capital

Examples of Physical Capital • Buildings • Equipment • Tools

Examples of Human Capital • College Education • Training • Job Experience