1. Bell-Ringer You have decided to open a pizza restaurant
With your group, make a list of the things that you will need to open your business
You are starting from nothing. List everything you think you will require before you can open the doors and start serving your customers.
You have five minutes to write as many as you can think of

2. Economy
What is it and why is it?

3. Objective
Describe, in general terms, the functioning of a market-based economic system

4. Classroom Rules Comply with all federal, state and district policies
Do not do anything that creates unsafe or unhealthy conditions in my classroom
Do not do anything that interferes with your learning
Do not do anything that interferes with anyone else’s learning
Do not let anyone else interfere with your learning

5. Classroom Procedures
Bring and use the proper materials at the proper time
No gum or food
Do not talk except when the activity permits or when you have a question (raise your hand first).
Stay in your seat unless you have permission
Do not do work from other classes unless you have permission
Listen carefully to instructions, execute them to the best of your ability, and ask if you do not understand them
Participate in the lesson by doing the correct activity at the correct time: listen, ask questions, discuss, read, write, research.

6. Vocabulary Traditional Economy Market Economy Command Economy
Mixed Economy
Goods and Services
Factors of Production
Natural Resources
Labor Resources
Capital Resources
Entrepreneurs
Inputs
Wants and Needs
Supply and Demand
Market
Scarcity
Subsidy

7. Goal of Economies
The goal of every economy is to satisfy the needs of the members of the group and as many of their wants as possible
Needs – the things you must have for survival (food, water, shelter, etc.) – if you do not get them, you will probably die
Wants – the things you would like to have, but your survival does not depend on your having them
Wants and needs are satisfied by the answers to the basic economic questions

8. Basic Economic Questions
What shall we produce?
How shall we produce it?
How much shall we produce?
Included in some lists, not included in others – it’s related to the first “how”
Who gets it?

9. Economic Systems All economic systems answer the basic questions
Four common systems:
Traditional Economy – not relevant to the lesson; we’ll come back to it in later lessons
Market Economy – often called “capitalism”
Command Economy – often called “communism” or “socialism”, but the two are different – more on that in a later lesson
Mixed Economy – has elements of both market and command economies

10. Differences in Economic Systems
The big difference between the systems is who answers the basic economic questions
When individuals answer all of the questions, the system is called “capitalist” or “market economy”
Individuals do not vote on the question; they answer it through a system called “supply and demand” in an imaginary place called a “market”
When government answers all or most of the questions, the system is called “communist” or “command economy”
“Mixed” systems are between those two extremes
Most economies are mixed; most governments help answer “how shall we make it?” in the form of rules and regulations and “what shall we produce?” in the form of subsidies

11. Factors of Production
Factors of Production are the general categories of inputs needed to produce goods and services
Natural Resources – the land and raw materials needed to produce the goods and services
Labor Resources – the knowledge and physical effort needed to produce the goods and services
Capital Resources – money; can also be human-made materials, but it’s purchased with money
Entrepreneur – the person who puts the other three resources together to produce the goods and services

12. Scarcity
All resources are limited; there are not enough resources to satisfy everyone’s wants
Because there is not enough for everyone, who answers “what shall we produce?” and “who gets it?” shows a difference in priority (importance)

13. Differences in Priorities
In a market system, the primary focus is on satisfying individual wants and needs
Upside: creativity, ingenuity and hard work are usually rewarded
Downside: economic inequality
Factors of Production are usually owned by individuals
In a command system, the primary focus is on satisfying group wants and needs
Upside: more economic equality
Downside: little incentive to be creative, ingenious or hard- working
Factors of Production are usually owned by the government

14. Activity
Take the list that you made in the bell-ringer activity and categorize the items on the list into
Natural Resources
Capital Resources
Labor Resources
You are the entrepreneur, so you don’t need to list that.
Your group has five minutes to complete your list
At the end of that time, groups will compare their categories

15. Pizza Restaurant Entrepreneur Natural Resources Labor Resources
You
Natural Resources
The land your restaurant is on
Labor Resources
Your employees
Capital Resources
Building
Furniture
Tables, chairs, counters, etc.
Equipment
Ovens, kitchen equipment, pots, pans, utensils, etc.
Ingredients
Flour, yeast, cheese, toppings, etc.

16. Factors and Free Market Systems
What shall we produce? Pizza
You answered that question
How shall we produce pizza?
Put the ingredients together according to your recipe, using the equipment and ingredients you bought. You answered the question
How much pizza shall we produce?
As much as customers will pay for. You and your customers answered the question
Who gets it?
Whoever will pay for it
Why are you doing it? Because you expect that you will make money.