Words to KnowWords to Know
NeedsNeeds Things that a person Things that a person cannotcannot live without live without
FoodFood ClothingClothing ShelterShelter AirAir
Words to KnowWords to Know
WantsWants Things people would like to have Things people would like to have but are but are
not necessarynot necessary for survival for survival IPodIPod Cell phonesCell phones DVD’s/Blue RayDVD’s/Blue Ray Luxury cars/trucksLuxury cars/trucks Fashionable ClothingFashionable Clothing
Words to KnowWords to Know
EconomicsEconomics StudyStudy of how people figure out ways to get of how people figure out ways to get
the things they the things they need and wantneed and want by by making making choices.choices.
Words To KnowWords To Know
ScarcityScarcity Having a Having a limited number of resourceslimited number of resources to to
produce things that people need or want.produce things that people need or want. ExampleExample
Band concert and only so many tickets and seats Band concert and only so many tickets and seats are availableare available
QuestionsQuestions
Describe some needs & wants from the Describe some needs & wants from the story.story.
Describe some of the choices that Describe some of the choices that needed to be madeneeded to be made
Write a wish list.Write a wish list. What might you have to do to get the What might you have to do to get the
items on your wish list?items on your wish list?
Words to KnowWords to Know
GoodsGoods Things that can be seen, touched, and Things that can be seen, touched, and
bought or soldbought or sold Physical itemsPhysical items
SunglassesSunglasses PopcornPopcorn CD’sCD’s
Words to KnowWords to Know
ServicesServices Activity performed by one person for another Activity performed by one person for another
personperson Sales personSales person DoctorDoctor LawyerLawyer TeachersTeachers Auto mechanicsAuto mechanics
Factors of ProductionFactors of Production
How things we need are producedHow things we need are produced 4 factors of production4 factors of production
LandLand LaborLabor CapitalCapital EntrepreneurEntrepreneur
Factors of ProductionFactors of Production
LandLand All natural resources that are used to All natural resources that are used to
produce a goodproduce a good Things found in natureThings found in nature
LandLand CropsCrops WaterWater
Factors of ProductionFactors of Production
Natural ResourcesNatural Resources Items from nature that can be used to create Items from nature that can be used to create
goods and servicesgoods and services CoalCoal WoodWood SunlightSunlight WaterWater
Factors of ProductionFactors of Production
LaborLabor People are paid to do to produce goods People are paid to do to produce goods
and servicesand services Labor forceLabor force
Made up of all the people who work for Made up of all the people who work for moneymoneyDoctorDoctorAssembly-line workerAssembly-line worker
Factors of ProductionFactors of Production
CapitalCapital Anything used to produce goods and Anything used to produce goods and
servicesservices MoneyMoney ToolsTools MachinesMachines factoriesfactories
Factors of ProductionFactors of Production
EntrepreneurEntrepreneur People who decide how to combine People who decide how to combine
resources to create new goods and servicesresources to create new goods and services Bring together land, labor & capitalBring together land, labor & capital Start new businessesStart new businesses Make all the decisions to produce goods and Make all the decisions to produce goods and
servicesservices
Economic SystemsEconomic Systems
Economic SystemEconomic System Organized way society provides goods & Organized way society provides goods &
services to meet the wants & needs of it services to meet the wants & needs of it peoplepeople
Economic SystemsEconomic Systems
TypesTypes Command EconomyCommand Economy Market EconomyMarket Economy Mixed EconomiesMixed Economies
Capitalist EconomyCapitalist Economy Free Enterprise EconomyFree Enterprise Economy
Economic SystemsEconomic Systems
Three questions to answerThree questions to answer
WHAT should be producedWHAT should be produced HOW should it be producedHOW should it be produced WHO should receive the good or serviceWHO should receive the good or service
Economic SystemsEconomic Systems
Traditional EconomyTraditional Economy
Uses habits, customs & religion to answer Uses habits, customs & religion to answer the WHAT, HOW & WHO questionsthe WHAT, HOW & WHO questions
Passed down from generation to generationPassed down from generation to generation Small communitiesSmall communities Work togetherWork together
Traditional EconomyTraditional Economy
AdvantageAdvantage Each person knows what role they playEach person knows what role they play Life is stable & predictableLife is stable & predictable
DisadvantageDisadvantage Difficult to change thingsDifficult to change things Lower standard of living because of little Lower standard of living because of little
changechange
Economic SystemsEconomic Systems
Command EconomyCommand Economy
Government makes the economic decisionsGovernment makes the economic decisions Owns land & capitalOwns land & capital Controls labor – where they work & what they are Controls labor – where they work & what they are
paidpaid Decides what to produce & how much it will costDecides what to produce & how much it will cost
Consumers have NO sayConsumers have NO say
Command EconomyCommand Economy
AdvantagesAdvantages
Public services are provided at little or no Public services are provided at little or no cost to peoplecost to people
Can change direction quicklyCan change direction quickly Meets needs of peopleMeets needs of people
Command EconomyCommand Economy
DisadvantagesDisadvantages
Doesn’t meet wants of the peopleDoesn’t meet wants of the people Wages are similar no matter what job they Wages are similar no matter what job they
havehave Rarely lose jobs even if performing poorlyRarely lose jobs even if performing poorly Quality of products sufferQuality of products suffer
Economic SystemsEconomic Systems
Market EconomyMarket Economy People make economic decisionsPeople make economic decisions
What gets madeWhat gets made How goods & services are madeHow goods & services are made Who will consume the goods & servicesWho will consume the goods & services
Market EconomyMarket Economy
Buyer & sellers exchange goods & Buyer & sellers exchange goods & servicesservices
Each person Each person specializesspecializes in producing or in producing or providing goods & servicesproviding goods & services
People sell what they have & buy what People sell what they have & buy what they wantthey want
Market EconomyMarket Economy
AdvantagesAdvantages
Change based on what people wantChange based on what people want FreedomFreedom
Producers make things that will sellProducers make things that will sell Consumers can buy what they wantConsumers can buy what they want
Government has little control Government has little control
Market EconomyMarket Economy
DisadvantagesDisadvantages
Doesn’t provide enough services that people Doesn’t provide enough services that people value – health care, education, justicevalue – health care, education, justice
A lot of changeA lot of change Producers worry about someone else Producers worry about someone else
making a better product for less moneymaking a better product for less money
Mixed EconomyMixed Economy
Market based economyMarket based economy Government plays a roleGovernment plays a role Countries that use mixed economyCountries that use mixed economy
United StatesUnited States JapanJapan CanadaCanada Great BritainGreat Britain
Free Enterprise SystemFree Enterprise System
U.S. has a capitalist economy & a free U.S. has a capitalist economy & a free enterprise economyenterprise economy Competition is allowedCompetition is allowed Government has some involvementGovernment has some involvement People own the factors of productionPeople own the factors of production
Capitalism & Free Capitalism & Free EnterpriseEnterprise
4 basic principles4 basic principles
Voluntary ExchangeVoluntary Exchange Private Property RightsPrivate Property Rights Profit MotiveProfit Motive CompetitionCompetition
Capitalism & Free Capitalism & Free EnterpriseEnterprise
Voluntary ExchangeVoluntary Exchange
People buy or sell what they want, when People buy or sell what they want, when they wantthey want
Transactions are good for the buyer and the Transactions are good for the buyer and the sellerseller
Capitalism & Free Capitalism & Free EnterpriseEnterprise
Private Property RightsPrivate Property Rights
Right to do what you want with the things Right to do what you want with the things they ownthey own
Can’t interfere with rights of othersCan’t interfere with rights of others Keep rewards that you earnKeep rewards that you earn Gives people desire to work hard & be Gives people desire to work hard & be
successfulsuccessful
Capitalism & Free Capitalism & Free EnterpriseEnterprise
Profit MotiveProfit Motive
Making moneyMaking money Business owners make decisions about the Business owners make decisions about the
businessbusiness Decisions are made by amount of money Decisions are made by amount of money
that will be madethat will be made
Capitalism & Free Capitalism & Free EnterpriseEnterprise
CompetitionCompetition
Producers what to sell products at the Producers what to sell products at the highest pricehighest price
Consumers what to buy products for the Consumers what to buy products for the lowest pricelowest price
Government’s RoleGovernment’s Role
Protect citizensProtect citizens Producers give information to consumersProducers give information to consumers Laws Laws
Food, drugs & automobilesFood, drugs & automobiles Against false advertisingAgainst false advertising Protect environmentProtect environment Individual freedomsIndividual freedoms
Individual FreedomIndividual Freedom
DiscriminationDiscrimination Treat a person a way based on race, Treat a person a way based on race,
gender, religion or agegender, religion or age
Federal Regulatory Federal Regulatory AgenciesAgencies
Environmental Protection AgencyEnvironmental Protection Agency Protect people’s health & environmentProtect people’s health & environment
Equal Employment Opportunity Equal Employment Opportunity Commission (EEOC)Commission (EEOC) Enforcing civil rights lawsEnforcing civil rights laws
Federal Regulatory Federal Regulatory AgenciesAgencies
Federal Trade Commission (FTC)Federal Trade Commission (FTC) Against monopoliesAgainst monopolies
Food & Drug Administration (FDA)Food & Drug Administration (FDA) Sets and enforces standards for food, drugs Sets and enforces standards for food, drugs
and cosmeticsand cosmetics