Warmup 1 Which term is used to describe
Warm-up 1. Which term is used to describe the study of how people make decisions in a world where resources are limited? a. scarcity b. decision-making modeling c. economics d. cost-benefit analysis 2. How would you describe capitalism? 3. Of the following scenarios, which is an example of immediate gratification? a. an individual spends $100 on a pair of shoes instead of putting that money into their saving account b. an individual puts money into their savings account to use to buy a car when they turns 18 c. an individual pays for a gym membership instead of going to the movies d. an individual signs up for a credit card in order to begin building credit
Economic Basics Unit 1
Levels of economic study Economics • Economics is the scientific study of the means of producing and distributing goods and services so that they may be consumed by others. Microeconomics • individual decisions or very small scale stuff. Macroeconomics • national productivity, or large-scale stuff.
ECONOMIC SYSTEMS • Procedure used to produce and distribute goods and services • Answers the economic questions: 1. WHAT is produced? 2. HOW is it produced? 3. FOR WHOM is it produced?
• Production - making a good or service that has value to another individual. • Distribution - getting the goods to the individuals who will use them. • Consumption - The actual use of the goods that are produced.
Factors of Production 1. Capital – goods or money used in the supply of other products 2. Enterprise - entrepreneurs organize the factors of production and take risks 3. Land – natural resources available for production. 4. Labor – the human input into the production process
Markets • A market is any arrangement that allows buyers and sellers to exchange things. • Specialization is the concentration of the productive efforts of individuals and businesses on a limited number of activities. – Specialization leads to efficiency in the use of capital, land, and labor.
3 main types of economies (make this chart in your notes) Who decides HOW Who decides WHO Advantages WHAT is produced? is it produced? gets it? Market Economy Definition: Command Economy Definition: Mixed Economy Definition: Traditional Economy Definition: Socialist Economy Definition: Disadvantages
Economic Systems Command economy • An economy in which most economic issues of production and distribution are resolved through central planning and control Market economy • An economy that relies on a system of interdependent market prices to allocate goods, services, and productive resources and to coordinate the diverse plans of consumers and producers, all of them pursuing their own self-interest Mixed economy • an economy that involves a degree of private economic freedom mixed with a degree of government regulation of markets Traditional economy • An economy in which customs and habits from the past are used to resolve most economic issues of production and distribution Socialist economy • An economic and political system based on public or collective ownership of the means of production
Economic Systems Review Game
Traditional, Market, Command, or Mixed? • State planners in Country A met to decide what the country should focus on producing. After much deliberation, they decided it would be in the country’s best interest to use their limited resources to produce automobiles instead of other consumer goods, such as electronics or textiles. The state planners passed their decision down to factories, and allocated to them raw materials, workers, and other resources needed to produce automobiles. Factories were then told how much they should produce with these resources and who the final products should be shipped to.
Traditional, Market, Command, or Mixed? • In Country B, business owners decide what to produce, how much to produce, and who to produce for. The CEO of Tarheelia Audio, one of the leading audio equipment producers in the country, recently decided to increase production levels of the company’s newest MP 3 player model, and at the same time decrease production levels of their most popular CD player. The reason for the emphasis on MP 3 players is that demand for CD players has decreased dramatically as MP 3 technology has taken over the market. Simply put, there is more profit to be made in the MP 3 market.
Traditional, Market, Command, or Mixed? • In Country C, people rarely engage in market transactions. For the most part, they do not need to. Families grow their own vegetables and raise their own animals or hunt to get meat. Certain times get tough for people in Country C, like when the winters are particularly cold or animals change their migration patterns. For this reason, it is important that families stock up in “good times” and develop relationships with neighbors with whom they can share or trade.
Traditional, Market, Command, or Mixed? • In Country D, business owners make most economic decisions. As long as they abide by fair trade policies, they can decide what to produce, how to produce, and for whom to produce without government intervention. These decisions are made by business owners based on what happens in the market. For example, a computer manufacturer recently developed a new video gaming system, but decided to wait until closer to the holidays to release the system to the public because it believed anticipation among consumers would allow the company to charge a higher price for the system
Make a concept map with all the terms – think about how they’re connected to each other • • • • Economics Microeconomics Macro economics Production Distribution Consumption Capital Enterprise Land Labor Market Specialization Market economy Command economy Mixed economy Traditional economy
Discussion questions • Does a country’s economy have an impact on the amount/type of rights their citizens are given? How does it do that? • Does it impact the type of government a nation has? Why?
No Warm-up • We’ll finish the notes from yesterday.
3 main types of economies (make this chart in your notes) Who decides HOW Who decides WHO Advantages WHAT is produced? is it produced? gets it? Market Economy Definition: Command Economy Definition: Mixed Economy Definition: Traditional Economy Definition: Socialist Economy Definition: Disadvantages
Economic Systems Command economy • An economy in which most economic issues of production and distribution are resolved through central planning and control Market economy • An economy that relies on a system of interdependent market prices to allocate goods, services, and productive resources and to coordinate the diverse plans of consumers and producers, all of them pursuing their own self-interest Mixed economy • an economy that involves a degree of private economic freedom mixed with a degree of government regulation of markets Traditional economy • An economy in which customs and habits from the past are used to resolve most economic issues of production and distribution Socialist economy • An economic and political system based on public or collective ownership of the means of production
Economic Systems Review Game
Traditional, Market, Command, or Mixed? • State planners in Country A met to decide what the country should focus on producing. After much deliberation, they decided it would be in the country’s best interest to use their limited resources to produce automobiles instead of other consumer goods, such as electronics or textiles. The state planners passed their decision down to factories, and allocated to them raw materials, workers, and other resources needed to produce automobiles. Factories were then told how much they should produce with these resources and who the final products should be shipped to.
Traditional, Market, Command, or Mixed? • In Country B, business owners decide what to produce, how much to produce, and who to produce for. The CEO of Tarheelia Audio, one of the leading audio equipment producers in the country, recently decided to increase production levels of the company’s newest MP 3 player model, and at the same time decrease production levels of their most popular CD player. The reason for the emphasis on MP 3 players is that demand for CD players has decreased dramatically as MP 3 technology has taken over the market. Simply put, there is more profit to be made in the MP 3 market.
Traditional, Market, Command, or Mixed? • In Country C, people rarely engage in market transactions. For the most part, they do not need to. Families grow their own vegetables and raise their own animals or hunt to get meat. Certain times get tough for people in Country C, like when the winters are particularly cold or animals change their migration patterns. For this reason, it is important that families stock up in “good times” and develop relationships with neighbors with whom they can share or trade.
Traditional, Market, Command, or Mixed? • In Country D, business owners make most economic decisions. As long as they abide by fair trade policies, they can decide what to produce, how to produce, and for whom to produce without government intervention. These decisions are made by business owners based on what happens in the market. For example, a computer manufacturer recently developed a new video gaming system, but decided to wait until closer to the holidays to release the system to the public because it believed anticipation among consumers would allow the company to charge a higher price for the system
Budgeting scarcity worksheet
The Water Project • Read about the international water crisis • https: //thewaterproject. org/wat er_project_detail
How would each of the different types of economies try to address water scarcity? • Market econ – • Command econ – • Mixed econ –
Scarcity problem solving • In your groups, each person will have a role and information to help the villages decide what path to take to get clean water. • Work together in your groups to come up with a solution that will work for each of the 4 villages.
Discussion questions
- Slides: 30