Economics

1. Economics

2. LEQ’s • What are limited resources? • What are the 3 economic questions that every society must answer? • What are the similarities and differences between the various types of economic systems?

3. Make a list of the ten things you most want (things that you can buy). Money is no object! Which of these are REALLY necessary for you to survive? (necessary for life!) Therefore, are these things WANTS or NEEDS?

4. Now, make a list of the top ten things you think you will need in order to live a good life. Comparing your two lists, first choice to first choice, second choice to second choice, which will you choose in order to have a good life? What did you give up and for what did you give it up?

5. What is this called? Opportunity cost

6. Opportunity Costs Something that is given up in order to have something else

7. Opportunity Costs Even countries have to look at opportunity costs. What are some things that our country has given up in order to gain other things?

8. Resources Every country relies on its resources. An abundance of resources NORMALLY = a wealthy country(ex. of exceptions … corrupt government)A lack of resources = poor countrySo, what are resources?

9. Role of Resources • Should Kansas invest money in the lobster industry? • Should Florida invest money in the snow skiing industry? • Should Alaska invest money in the citrus fruit industry? • Why? • Would the Alaskan crab industry be a good industry for Alaska? • Would promoting beaches be a good industry for Florida? • Why?

10. Role of Resources Normally, the availability of natural resources will dictate the answers to the question … what will that region produced?

11. Role of Resources • Alaska has the largest Alaskan crab industry in the United States. • Florida has the largest tourism industry in the United States. • Georgia has the largest peach industry in the United States. • Therefore, these states have developed specific industries based on the availability of natural resources. What is this called? Specialization

12. How does SPECIALIZATION help a country? • What does Alaska specialize in? • How does this help Alaska? • What does Kansas specialize in? • How does this help Kansas? • What does Georgia specialize in? • How does this help Georgia? • What does Saudi Arabia specialize in? • How does this help Saudi Arabia? • What does the US specialize in? • How does this help the US?

13. Resources divided into 3 groups Labor Capital Land The 3 groups of resources

15. Land is not just the soil, but also… Animals Metals Plants Water

17. Labor is the work people do. It includes… …and providing services like… Providing goods like… Entertaining, firefighting, and protection. A butcher, a baker, and a candlestick maker.

18. Capital … machines buildings tools …goods used to make other goods But does capital refer to just goods? What other type of capital do we have?

19. Capital also refers to HUMAN capital. How can a country invest in human capital? Investing in training people in specific skills Investing in education Investing in health care How might a country benefit from investing in human capital?

20. What type of resources do you see in the following photo?

21. Make sure your graphic organizer includes this information

22. These 3 groups of resources are also called… Labor Capital Land …the factors of production.

23. Which of these are limited? Labor Capital Land All of them!

24. Now the we understand resources, let’s now look at economic systems!

25. 3 basic questions of economics that every country has to answer … • What will be produced? • How will it be produced? • For whom will it be produced?

26. The rules a country follows in answering the 3 basic questions are called… Economic system

27. 4 kinds of economic systems • Traditional economy • Command economy • Market economy • Mixed economy

28. What do you think are the following types of economic systems? Folks answer the 3 basic questions by producing what their families have always produced. The government answers the 3 basic questions and tells people what they will produce. Command Traditional Folks answer the 3 basic questions by producing what they want to produce and selling their goods in the market. Some folks produce what they want; the government controls the other. Mixed Market

29. Scenarios … Billy Bob grows corn because his father grew corn, and his grandfather grew corn. Zululand’s government determined that one village would grow corn and the other peas. Command Traditional Sally Sue sells sea shells and Peter Piper picks prickly peppers and pears. Blueland’s government owns the oil production, but Bobby Jo sells the drills. Market Mixed

30. Traditional economy • Based on what has been done in the past. • The question of “how should goods and services be produced?” is answered by “what have we always done?” • People herd cattle because their families have always herded cattle • People farm because their families have always farmed

31. Command economy • Government leaders decide the answers to the basic economic questions. • The government controls the land, labor, and capital. • The government decides what will be produced, how it will be produced, and for whom it will be produced. • And often times … • Where people will work • How much will they be paid

32. Market economy • Each person answers the 3 economic questions • People buy and sell whatever they like • People decide for themselves where they will work • The most important part of a market economy is the market

33. Mixed economy • Mixed • Government has some say over 3 basic questions • However, many decisions are made by the people

34. 4 things that make a market system work… Let’s see how each of these elements impact the market system! I need volunteers! • Competition • Profit • Private property • Freedom of exchange How do these elements affect the market system? How would the market system be different if one of these elements were missing?

35. Note … Most systems not just one or the other … most lie somewhere in between. Pure Market Pure Command Mixed

36. Now that we understand economic systems, let’s look at what can hurt an economy! Make a list of everything that you know of that can hurt a country’s economy.

37. Elements that can negatively affect a country’s economy … • Natural disasters • Volcanoes / earthquakes • Weather • Flooding • Snow storms • Hurricane • Conflict • Strikes • Boycotts • Unemployment • Trade barriers Your thoughts … what do you think can negatively affect a country’s economy? Working with your partner, how many elements can you and your partner list?

38. Trade Barriers … Which definition goes with which term? • Tariffs • Quotas • Embargos A tax imposed by a government on imports A restriction on foreign trade, usually meant to hurt the other country How do each of these barriers impact the price of a product? The limit on a number of items that can be imported into a country.

39. Free Trade Agreement • What does free trade mean? • Who does the US have a free trade agreement with? The absence of trade barriers. • Today, the United States has FTAs with 17 countries, such as Israel, Jordan, Canada, Oman, and Singapore to name a few. • In 2006, six new FTAs were implemented: with Bahrain, El Salvador, Guatemala, Honduras, Morocco, and Nicaragua.

40. What can we determine about our trading industry based on this chart?

41. Words to know… • Economic system • Traditional economy • Market economy • Mixed economy • Command economy • Factors of production • 3 basic questions of economics • Opportunity cost • Tariffs • Quotas • Embargoes • Free trade

42. Ticket out the door… Answer the following essential questions … • What are limited resources? • What are the 3 economic questions that every society must answer? • What are the similarities and differences between the various types of economic systems?

43. Your turn... Share your notes with a partner to ensure your notes are complete! The end!

44. A good is something that is made by people. A service is action people do for others.