1 / 32

Understanding Economic Decisions and Systems

Learn about the difference between needs and wants, how to satisfy them, and the types of economic resources. Explore the basic economic problem, decision-making process, and different economic systems.

sallief
Télécharger la présentation

Understanding Economic Decisions and Systems

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. C H A P T E R 1 Economic Decisions and Systems 1-1 Satisfying Needs and Wants 1-2 Economic Choices 1-3 Economic Systems 1-4 Supply and Demand

  2. 1-1 Satisfying Needs and Wants Goal 1 Explain the difference between needs and wants. Goal 2 Distinguish between goods and services. Goal 3 Describe the types of economic resources.

  3. KEY TERMS • needs • wants • goods • services • economic resources

  4. NEEDS AND WANTS • Needs are essential • Wants add to the quality of life • Needs and wants are unlimited

  5. Checkpoint  • What is the difference between a need and a want? • Needs are those things required to live, such as food, clothing, and shelter. • Wants are things that add comfort and pleasure to our lives such as television, music CDs, and movies.

  6. Checkpoint  • How do people satisfy their wants and needs? • People satisfy their wants and needs by purchasing and consuming goods and services.

  7. ECONOMIC RESOURCES • Natural resources • Human resources • Capital resources • Resources are limited

  8. Checkpoint  • What are the three types of economic resources? Give an example of each type. • Natural: water, land, trees, animals, and minerals. • Human: labor (people who run farms and factories, transport goods, provide services, or manage businesses). • Capital: money, land, buildings, tools, and equipment.

  9. 1-2 Economic Choices Goal 1 Understand the basic economic problem. Goal 2 Explain the steps in the decision-making process.

  10. KEY TERMS • scarcity • economic decision-making • trade-off • opportunity cost

  11. THE BASIC ECONOMIC PROBLEM • Choices • Trade-offs and opportunity costs

  12. Checkpoint  • What is opportunity cost? • Opportunity cost is the value of the next best alternative that you don’t choose. • It is what you are willing to give up in order to have your first choice.

  13. THE DECISION-MAKING PROCESS 1. Define the problem. 2. Identify the choices. 3. Evaluate the advantages and disadvantages of each choice. 4. Choose one. 5. Act on your choice. 6. Review your decision.

  14. Checkpoint  • What are the six steps in the decision-making process? • Define the problem. • Identify the choices. • Evaluate advantages and disadvantages of each alternative. • Choose one. • Act on your choice. • Review your decision.

  15. 1-3 Economic Systems Goal 1 Identify the three economic questions. Goal 2 Differentiate among the main types of economic systems. Goal 3 Describe the economic system of the United States.

  16. KEY TERMS • economic system • command economy(communism)- an economy in which resources are owned and controlled by the government • market economy-(capitalism) an economy where the resources are owned and controlled by the people • traditional economy-an economy in which goods and services are produced the way they have always been produced • mixed economy- (socialism)an economy that combines the elements of a market and command economy

  17. THE THREE ECONOMIC QUESTIONS • What to produce? • How to produce? • What needs and wants to satisfy?

  18. Checkpoint  • What are the three economic questions? • What goods and services will be produced? • How will the goods and services be produced? • What needs and wants will be satisfied with the goods and services?

  19. TYPES OF ECONOMIC SYSTEMS • Command economy • Market economy • Traditional economy • Mixed economies

  20. Checkpoint  • What are the main differences among the three economic systems? • The main differences among the economic systems are found in the ways in which the three economic questions are answered.

  21. Capitalism • 1. Advantages: economic system produces goods and services that people want/need and that bring a profit to sellers; freedom of choice; get more income for individual input in the market; competition keeps prices lower for consumers; government does not dictate for whom, what, or how to produce. • 2. Disadvantages: citizens who are productive are the only ones who are rewarded; wealth of the economy is not evenly distributed. • 3. Main Countries: United States, Japan, Canada, and Great Britain.

  22. Traditionalism: • 1. Advantages: Everyone has a role in the economy and economic life is stable; community life continuous. • 2. Dis-advantages: Discourages new ideas and ways of doing things; Growth is limited, so this economy falls behind other kinds of economies. • 3. Main Countries who have Traditionalism style economies are societies living in the rain forests of Latin America, parts of Africa, and the Middle East.

  23. Communism • 1. Advantages: Can make a dramatic change in a short time on production of goods; each person is provided with a job with certain medical and social services. • 2. Disadvantages: Consumer goods/services rank low on the list of priorities for that country; therefore, fewer consumer wants are met. Next there is a lack of incentive to work hard. Finally, it limits an individual’s choice to make on their own economic decision. • 3.Main Countries: North Korea, China, and Cuba

  24. Socialism • 1. Advantages: Government and private business work together; individuals are provided with medical services, lifelong welfare services, and social security benefits for everyone. • 2. Disadvantages: Workers are taxed at an extremely high rate to pay for all the things government provides; high tax rate discourages private business; also the high tax rate lessens consumers’ spendable income • 3. Main Countries: Sweden and France

  25. Checkpoint  • Name the four principles of the U.S. economic system. • Private property • Freedom of choice • Profit • Competition

  26. 1-4 Supply and Demand Goal 1 Describe supply and demand orally and with graphs. Goal 2 Discuss how supply and demand affect prices of products and services.

  27. KEY TERMS • consumer • producers • demand • supply • market price

  28. PARTICIPATING IN A MARKET ECONOMY • Consumers set demand • Producers establish supply • A graphic view

  29. DEMAND AND SUPPLY The higher the demand the more the company can charge for the product. When demand falls, price follows.

  30. Checkpoint  • How does the price of a product affect demand and supply? • As prices decrease, the number of consumers willing and able to purchase the product (demand) will increase. • As prices increase, businesses will be willing to supply larger quantities of the product.

  31. DETERMINING PRICE • Factors influencing demand • Factors influencing supply

  32. Checkpoint  • How is the market price for a product determined? • Supply, demand, and competition determine the market price for a product or service. • The market price is the point at which supply and demand are equal.

More Related