1 / 47

Chapter One

Chapter One . Vocabulary Terms and Concepts. What is Economics? the study of how people decide ways to get the things they need and want by making choices. Needs – what people must have to live. Food Clothing Shelter.

odele
Télécharger la présentation

Chapter One

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Chapter One Vocabulary Terms and Concepts

  2. What is Economics? • the study of how people decide ways to get the things they need and want by making choices

  3. Needs – what people must have to live. Food Clothing Shelter Wants – the things we would like to have, but can live without. Needs vs. Wants

  4. What choices have you had to make lately? Why do we have to make choices about which goods or services we can buy? The resources used to make goods and services are scarce(limited number/not enough). That makes the goods and services scarce.

  5. What is the difference between scarcity and shortage? • Scarcity means that there is a limitedquantity of resources to meet unlimitedwants and needs. • Shortage is a situation where a good or a service is temporarily unavailable. OUT OF STOCK

  6. Economic Choice= Opportunity Cost You make an economic choice when you only have money for certain items, not all. Example: I do not have enough money for both popcorn and a pretzel. I must choose, so I buy the popcorn. That is my economic choice. YUM!

  7. Economic Choice= Opportunity Cost Opportunity cost is what you must give up when you make an economic choice. Example: I chose the popcorn, so I have to give up the pretzel. That is my opportunity cost.

  8. http://www.kidseconposters.com/images/hp_op_cost.pdf

  9. Goods and Services • Goods • Services

  10. How do we satisfy our wants and needs? • We buy goods and services. What are “Goods” ? • physical objects such as clothes or shoes What are “Services” ? • actions or activities that one person does for another such as haircuts or auto repair. Can you think of any more?

  11. All goods and services are produced using resources. • What is the term we use in economics that means resources? • Factors of Production: the FOUR groups of resources that are used to make all goods and services • Human (labor) (labor force) (services) • Capital • Natural (land) • (Entrepreneurship)

  12. Factors of Production Resourcesneeded to produce goods and services 1 2 3

  13. 4 Entrepreneur • the person who organizes or combines (puts together) land (natural), labor (human) and capital to create and market new goods and services- a business owner. • Who do you know that owns their own business? What type of business is it?

  14. Human Resources Natural Resources Capital Resources Three types of resources work together in our economy Entrepreneur or Government

  15. Factors of Production Model Resources needed to produce goods and services LAND (nature) - cotton LABOR (human) -seamstress ENTREPRENEUR –designer, business owner GOOD – t-shirt CAPITAL – thread, sewing machine.

  16. 3 questions every society must answerallocation of resources • What goods shall be produced (made)? • How will the goods be produced? • For whom will the goods be produced? How a society answers those questions defines its economic system.

  17. What goods shall be produced? How will the goods be produced? For whom will the goods be produced? Think about a very small society

  18. “Market Economy” Free Enterprise Characteristics: “Command Economy” Communism Characteristics: X ___________ Capitalism Socialism Private Ownership of Resources Government plays a small role No central economic plan Variable Income Distribution Market supply and demand sets prices so prices fluctuate Government Ownership of Resources Government Controls the Economy Government creates a central plan Government may redistribute income (income distribution) May use price controls to regulate market

  19. TRADITIONAL - Economic decisions are based on custom, habit or ritual. • Life and economic decisions revolve around the family. • Roles are defined by gender. Fathers teach sons, mothers teach daughters • Communities are small and close. • The entire group is supported. • Agriculture and hunting primary activities. Example of Traditional Inuit Economy article. http://www.econedlink.org/lessons/index.php?lid=795&type=student

  20. WEAKNESSES of Traditional Economy • Unable to deal with environmental disasters • Slow to adopt new technology or methods • Lack modern conveniences • Low standard of living

  21. CENTRALLY PLANNED (or Command) – Government makes all the economic decisions • Government controls resources and production • Can quickly change production in selected industries • Guarantees jobs and incomes Karl Marx

  22. WEAKNESSES of a Command Economy • Cannot meet consumers’ needs or wants • Workers lack incentive to work hard • Large expensive bureaucracy needed to make production decisions • Individual freedoms sacrificed

  23. MARKET – an arrangement that allows buyers and sellers to echange goods and services • Individuals specialize • Self-interest or personal gain is the motivating factor • Responds efficiently to changing market conditions • Provides freedom of choice • Encourages economic growth • Very little government interference

  24. WEAKNESSES of a Market Economy • No guarantee of economic equity (fairness). There is an unequal distribution of wealth. • There is no economic security- you are free to succeed or fail

  25. ___________ Free Enterprise Socialism X MIXED ECONOMY Ownership of resources; private property? Governments Role in the Economy? Intervention in the Market; the role of price? Why is the United States considered a mixed economy?

  26. Why is the United States considered a mixed economy? • With your partner, create a list in your notes of all the ways you can think that prove that the US is a mixed economy.

  27. The Rise of Mixed Economies

  28. A Continuum of Mixed Economies Pure Market Communism Hong Kong United States Finland China Cuba Singapore France RussiaNorth Korea

  29. The Rise of Mixed Economies • Market economies, although able to provide the most benefits to individuals, are not able to meet the economic needs of modern society without the help of government. • Government is needed to provide defense, roadways, education, safety nets, health care, mass transit, workplace safety, adequate income levels, adequate competition, product safety, etc.

  30. Government’s Role in a Mixed Economy The government purchases land, labor, and capital from households in the factor market It purchases goods and services from businesses in the product market. In order to pay for its purchases and the services it provides households and businesses, it collects taxes from both.

  31. Economic Specialization Individuals or groups who concentrate on one type of good or service. Apple farmer Carpenter

  32. Trade-offs • the choices we have when faced with a decision (sleep or study) Opportunity Cost • the most desirable alternative given up as the result of a decision (I chose sleep so my opportunity cost is studying) Guns or Butter • the choices a country must make when choosing whether to produce more or less military or consumer goods

  33. Production Possibilities Curve • a graph that shows alternative ways to use an economy’s resources Production Possibilities Frontier • the line on the graph that shows the maximum output possible. • The location of the frontier is determined by the amount of resources and technology available. • These are scarce so our ability to produce is limited. Production Possibilities Curve A B Production Possibilities Frontier military goods “guns” C D 0 consumer goods “bread”

  34. Production Possibilities Curve . A production possibilities curve shows the opportunity cost of producing more of one type of good or service. A . B . Opportunity Cost = 3 less military goods 1 2 3 4 5 6 7 8 9 10 11 Q Military goods in thousands C 1 more consumer good . D 1 2 3 4 5 6 Q Consumer goods in hundred thousands

  35. Production Possibilities Curve • Any points (production) along the frontier line (A,B,C, D) is efficient and possible • Any point (production) inside the frontier line (E) is possible but inefficient. Resources are underutilized. . . • Any point outside of the frontier line (W) is not possible. We do not have the resources or the technology to produce it. W A . B 1 2 3 4 5 6 7 8 9 Q . Military goods E C . D 1 2 3 4 5 6 Q Consumer goods

  36. By adding more resources (land, labor or capital) or using the ones we have more efficiently (technology), the curve can shift outward ECONOMIC GROWTH Military goods in thousands Consumer goods in hundred thousands

More Related