Wants and Needs goods: physical items – food, clothing, cars, housing, etc. services: activities people do for a fee producer: person or business – makes goods or provides a service
Resources and Scarcity natural resource: gift of nature – part of the natural environment, - water, trees, minerals human resources: people – those who produce goods & provide services capital resources: money & property – used to produce goods and services scarcity: available resources – demand greater than supply
Making Choices Scarcity vs. producers & consumersScarcity Unlimited needs vs. wants Limited resources vs. limited amounts of goods & services Basis of an economic system –choosing how to use resources Those making choices in United States –individuals, businesses, & communities
Costs and Benefits Opportunity benefit –Choices (getting a job vs. going to college) –Immediate salary vs. getting an education Opportunity cost – cost of choice not taken Other choices of opportunity benefits & costs –Using resources or using time –Value of non-chosen alternative
Trade-Offs Either/or choice: not always the best May combine parts of choices as trade-off Trade-off choices to get wants & needs
Supply and Demand supply: quantity of a good or service offered for salesupply demand: quantity of a good or service consumers are willing to buy –Lower prices: consumers buy more, producers make less $ per item –Higher prices: consumers buy less, producers make more $ per item profit: amount left after costs are subtracted from price (motivator for producers)
Basic Economic Questions Four basic economic questions: 1) What do we produce? 2) How can it be produced? 3) How much will it cost to produce? 4) For whom will we produce?
What to Produce Making the necessary decisions –Meeting needs & wants –How to make the capital resource (money) –Human resources –Natural resources Finally, deciding what to produce
How to Produce Plan of action: –How to carry out plan –Process of implementation –Supplies needed Overall production schedules: –When to start production –When to end production
How Much to Produce Items to consider for plan –Time involved –Resources needed –Market demand for product (s) and/or service (s) Decisions affected by scarcity
For Whom to Produce Develop knowledge of consumers Study needs of consumers Consider supply & demand Analyze & plan for competitors Consider advertising
Economic Systems economist: one who studies the economy Three basic kinds of economies 1.Traditional Economy 2.Command Economy 3.Market Economy Economy may function as combination of all three
Traditional Economy Customs, habits, & beliefs determine and answer the four basic economic questions Continues in the way it has always been done
Command Economy The government … controls the economy answers the four basic questions makes the decisions has power & authority negotiates input & output controls competition
Market Economy Individuals… Answer the four basic economic questions based on supply & demand Also known as free enterprise Based on private ownership Freedom of choice Click here to return to Main Menu.
Section 2: Louisianas Economic History ESSENTIAL QUESTION: –What were Louisianas early economic systems?
Section 2: Louisianas Economic History What words do I need to know? 1. barter 2. mercantilism 3. smuggling 4. indigo 5. tobacco 6. commerce
Louisianas Economic History 1 st economic system: barter (trading goods & services without money) Then mercantilism: command economy controlled by the government Next, smuggling: illegal trade with colonies of other nations
Louisianas Economic History Louisiana Purchase: –end of colonial period –end of earliest crops tobacco & indigo –beginning of agricultural market New market: sugar cane & cotton New Orleans: –became a major port for North America –1801 described as the grand mart of business, Alexandria of America
Louisianas Economic History Early years of statehood: a continuing agricultural economy 20 years before Civil War: a booming economy End of Civil War till after WWII: a struggling economy Growth and survival of war-developed industries
Louisianas Economic History New equipment & machines brought by technology Human labor replaced by machines Many farms deserted by workers 1880 – 1920: most old growth trees cut or gonetrees cut or gone
Louisianas Economic History Oil (another resource) –Became valuable in early 20 th century –Economy base changed by new industry –Agricultural economy changed due to WWII & demands for oil –New economic direction: interdependent global economy –21 st century: seeks diversity & less dependence on oil industry Click here to return to Main Menu.
Section 3: Louisianas Resources ESSENTIAL QUESTION: –What roles do natural resources, capital resources, and human resources play in the economy of Louisiana?
Section 3: Louisianas Resources What words do I need to know? 1. mineral resources 2. nonrenewable 3. lignite 4. biological resources 5. renewable 6. pulpwood 7. labor union
Natural Resources Economy supported by abundant natural resources Examples: air, water, & rich soil 21 st century: agricultural shift from small farms/plantations to huge agribusiness systems Fewer people on farms Amount of crops not decreased
Natural Resources State ranking: 2 nd in sugar cane & sweet potatoes Vital crops: rice, cotton, soybeans Soil & climate good for raising beef & dairy cattle (dairy farming diminished) Abundant water supply good for agriculture, industry, human use, transportation, & recreation
Mineral Resources Oil Natural Gas Salt Sulfur Lignite
Mineral Resources minerals: inorganic substances formed by Earths geological processes Important to Louisianas economy nonrenewable: not replaced by nature once extracted (taken) from the environment Mineral resources found in Louisiana oil (black gold), natural gas, salt, sulfur, lignite Construction resources in Louisiana sand, gravel, limestone
Oil Oil for todays energy created by decayed plants from millions of years ago 10% of US oil reserves in Louisiana Louisiana: one of top oil-producing states in United States 1901 – 1 st oil well in Louisiana 1947 – 1 st platform in Gulf of Mexicoplatform More oil deposits beneath Gulf of Mexico
Natural Gas Larger deposits than oil ¼ of the nations supply 1 st burned as waste 1917: carbon black developed –used in making tires, ink, & more Important energy for homes & industry
Salt Needed for human & animal survival Used by Native Americans in trade A form of money, later Relied on by the Confederacy during the Civil War Used in chemicals & other products –polyvinyl chloride plastic –PVC pipe for plumbing
Sulfur Major ingredient in: matches, gunpowder, medicine, plastic & paper 1869 – richest 50 acres in the world town of Sulphur in Calcasieu Parish Decrease in value foreign import changed importance unprofitable to mine in Louisiana
Lignite Soft, brownish-black coal Burns poorly Mined since 1970s Found mostly in DeSoto Parish Used for electric power station near Mansfield
Biological Resources Biological resources –Common term: plants & animals –Scientific term: flora & fauna renewable: replenish over time Main divisions: –Forests –Wildlife –Fish
Forests 50% of Louisiana in forests 2 nd largest income producer 90% pine trees 75% trees cut for pulpwood Large trees cut for sawtimber
Forests Hardwood sawtimber used for furniture & flooring Paper mills, lumber mills, & plywood plants Christmas tree farms started by the Office of Forestry in the LA Dept. of Agriculture
Wildlife Variety of wildlife –History of trapping & hunting tradition Economic resources Fur pelts: –Once sold more than a million pelts annually Hunting regulations –State Department of Wildlife and Fisheries
Wildlife Hunting Source of food Recreation Millions of dollars for states economy Timber cutting Reduced forest land Forest animals decreased Increase in recent years
Wildlife White-tailed dear –Population has increased Black bear –Largest wild animal in Louisiana –Endangered: not legal to hunt Wild turkey –Classified as a game bird –Efforts have been made to increase its numbers
Wildlife Dove Quail Migratory waterfowl Alligators 1963: placed on the federal protected species list 1981: hunting under strict rules Millions of dollars in hides & meat
Fish (Recreation) Freshwater bream, bass, perch, catfish Game fish: –trout, redfish, drum, mackerel, blue marlin, amberjack, grouper, & tarpon (illegal to sell commercially)
Fish (Commercial) Crawfish raised on crawfish farmsCrawfish Catfish sold: freshwater & farms Commercial fishing: tuna, sea trout, red snapper
Capital Resources Human-made products used to produce goods or services Examples: rice mills, sugar refineries, oil refineries, cotton gins, & meat-packing plants Others include: transportation facilities – bridges, highways, & airports
Human Resources People who supply the labor –Physical or mental –Paid for goods or services Requirements –new skills & specialization –education & training Labor unions – workers organization to protect workers rights 1976 – right-to-work law passed – workers could not be forced to join a union Click here to return to Main Menu.
Section 4: Providing Louisianas Goods and Services ESSENTIAL QUESTION: –What is Louisianas place in the global economy?
Section 4: Providing Louisianas Goods and Services What words do I need to know? 1. private goods & services 2. public goods & services 3. interdependent 4. Superport 5. tariff 6. economic indicators 7. gross domestic product (GNP) 8. consumer price index 9. inflation 10. unemployment rate
Providing Louisianas Goods and Services free market: private goods & services Limited services & benefits to the owners Provided by the government: public goods & services Usually available to everyone –highways, police, education, libraries
Louisiana-made goods include… Ships, trucks, electrical equipment, glass products, automobile batteries, & mobile homes Chemicals industry –Ranks 2nd in USA –Petrochemicals (chemicals made from petroleum) –More than 100 chemical plants in LA –Fertilizers & plastics Manufacturing
Manufacturing Billions of gallons of gas from petroleum refineries each year Shipbuilding –transport ships & merchant vessels –Coast Guard cutters, barges, tugs, supply boats, fishing vessels, & pleasure craft
Aerospace and Aviation Louisiana workers part of the United States space program Space shuttles assembled in New Orleans Lake Charles aircraft assembly for military use
Biotechnology Combines biological research with engineering Pennington Biomedical Center leader in research
Service Industries Adds billions of dollars to the economy Tourism –sightseeing –eating –shopping –fishing & hunting –Mardi Gras Movie-making –1908 – 1 st film made in Louisiana –1917 – 1 st Tarzan film made –More recent – Steel Magnolias
Economic Institutions Joint effort to produce & sell goods and services Groups known as economic institutions Include –Businesses large and small –Corporations: owned by investors, banks, & labor unions Banks important: allow producers & consumers to trade, save, & invest
Louisiana in the U.S. and Global Economies 1 st economic systems: simple barter economies Todays systems interdependent –overlap –producers & consumers rely on each other Louisianas offshore port: Superport