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TraditionalMarketCommandTotal Team 1 Team 2 Team 3 Team 4 Team 5 Team 6.

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2 TraditionalMarketCommandTotal Team 1 Team 2 Team 3 Team 4 Team 5 Team 6

3 1. Which system had the most incentive to work? Why? 2. Which system had the least incentive to work? Why? 3. Which system was the most inefficient by modern standards? Explain. 4. Which system would you like to live in, why?

4 Standards Mastery Sheet Total Correct Total Number Mastery Percentage SSEF1a SSEF1b SSEF1c SSEF1d SSEF2a SSEF2b

5 Economic System – method used by society to allocate/distribute the scarce resources, in order to provide for the wants and needs of the people Economic System – method used by society to allocate/distribute the scarce resources, in order to provide for the wants and needs of the people Economic System

6 1. What goods and services should be produced? 2. How should these goods and services be produced? 3. For Whom to produce them for? 1. What goods and services should be produced? 2. How should these goods and services be produced? 3. For Whom to produce them for? Three Economic Questions

7 1. Traditional economy – relies on habit, custom, or ritual to decided the 3 economic questions 2. Market economy – economic decisions are made by buyers and sellers trading freely. 3. Command Economies – in a centrally planned economy, the central government decides how to answer the three economic questions. 4. Mixed Economies – most modern economies are mixed economies, market- based economic systems in which government plays a role in the market. 1. Traditional economy – relies on habit, custom, or ritual to decided the 3 economic questions 2. Market economy – economic decisions are made by buyers and sellers trading freely. 3. Command Economies – in a centrally planned economy, the central government decides how to answer the three economic questions. 4. Mixed Economies – most modern economies are mixed economies, market- based economic systems in which government plays a role in the market. Four Economic Systems

8  Bead Game Simulation

9 Economic Freedom - freedom to make choices free of the government Individual – where to work, study, consume Business – what, where and how to produce Economic Freedom - freedom to make choices free of the government Individual – where to work, study, consume Business – what, where and how to produce Economic Freedom

10 Economic Efficiency - making the most of scarce resources, using your resources wisely and productively Technological innovations allow society to be more productive Humans to robots Economic Efficiency - making the most of scarce resources, using your resources wisely and productively Technological innovations allow society to be more productive Humans to robots Economic Efficiency

11 Economic Security - government will provide a safety net in times of economic downturns Social Security, welfare, unemployment checks, etc. Economic Security - government will provide a safety net in times of economic downturns Social Security, welfare, unemployment checks, etc. Economic Security

12 Economic Predictability - knowing that goods and services will be consistently available Gas, food, energy, etc. Economic Predictability - knowing that goods and services will be consistently available Gas, food, energy, etc. Economic Predictability

13 Economic Equity - Fairness, being paid according to your skill level, not being discriminated against Lebron James is higher paid than a teacher A teacher is higher paid than a cashier at Wal-mart Economic Equity - Fairness, being paid according to your skill level, not being discriminated against Lebron James is higher paid than a teacher A teacher is higher paid than a cashier at Wal-mart Economic Equity

14 Economic Growth – improving the economy from year to year, improving standard of living as measured by GDP. Individual – better jobs, nicer homes, newer cars….better stuff! Business – produce more, increase customers, open new factories, etc. Economic Growth – improving the economy from year to year, improving standard of living as measured by GDP. Individual – better jobs, nicer homes, newer cars….better stuff! Business – produce more, increase customers, open new factories, etc. Economic Growth

15 Economic innovation – improving upon existing technology in order to improve efficiency. Walkman to the iPhone, Record Player to Digital Media Economic innovation – improving upon existing technology in order to improve efficiency. Walkman to the iPhone, Record Player to Digital Media Economic Innovation

16 Additional Goals – future goals for a society Environmental protection, full employment, universal medical care, etc. Additional Goals – future goals for a society Environmental protection, full employment, universal medical care, etc. Additional Goals

17 Economic Efficiency Picture Summary: This picture represents assembly line production at an automobile manufacturing plant. This shows how the division of labor and specialization can increase efficiency. Poster Requirements: 1.Title - Economic Goals and Societal Values 2.Summary Statement – “The Economic Goals and Societal Values provide a basic framework for each society and their attempts to provide for their people.” 3.Pictures of each goal represent each of the economic and social goals. 1 if working alone 2 if working with a partner 3 if working with a group of 3 4.Label, describe and summarize each picture 1.Economic Freedom 2.Economic Efficiency 3.Economic Security 4.Economic Predictability 5.Economic Equity 6.Economic Growth 7.Economic Innovation 8.Additional Goals

18 Economic Goals and Societal Values Summary Statement: The Economic Goals and Societal Values provide a basic framework for each society and their attempts to provide for their people. Economic Efficiency Definition: picture represents an efficient use of resources through assembly line production Economic Security Economic Growth Economic Equity Economic Freedom Additional Goals Economic Innovation Economic Predictability Poster Requirements: 1.Title - Economic Goals and Societal Values 2.Summary Statement – Purpose of economic and Societal Values 3.At least 8 pictures to represent each of the Economic Goals and Social Values 4.Label, definition and picture description for each of the 8 Economic Goals and Societal Values

19 StatementsEconomic Goal 1.Last week I willingly enrolled in college courses at Coastal. I am so happy that I make my decisions about my future. 2.My uncle lost his job, but thankfully he is able to receive unemployment checks. 3.Wal-Mart recently upgraded all of their registers to touch screen monitors. 4.General Motors replaced all of their human workers with robots in order to increase productivity. 5.As a result of the internet and technology, our economy has experienced significant expansion over the past 30 years. 6.I can always expect Publix to have the food I like! 7.Hopefully in the future we will have full employment. 8.With every degree/skill I earn, I improve my ability to make money. 1. Economic Freedom 2. Economic Security 3. Economic Innovation (Efficiency) 4. Economic Efficiency (Innovation) 5. Economic Growth (Innovation) 6. Economic Predictability 7. Additional (Future) Goals (Equity) 8. Economic Equity (Growth)

20  Imagine that you are walking into Walmart. List 3 items that you could purchase and the departments that you would find them in.

21 Market – buyers and sellers meet to exchange goods and services Market Economy – economic decisions are made by consumers and businesses based on buying and selling of goods and services All resources are privately owned Any income derived from selling resources goes exclusively to the owner The government has no role The Free Market

22  Consumer Sovereignty - in a free market, consumers determine the goods that are produced; this makes them "sovereign" over production in an economy.  “Ruler” of the market; expressed through a dollar vote for products when we make purchases. “The customer is always right”.  When consumers buy products, their “dollar vote” signals to producers what to make and how much. Role of the Consumer

23  Specialization – people focus on a specific purpose/task  Specialization – the separation of tasks within a system; people focus on a specific purpose/task  Division of Labor – Workers perform fewer tasks in order to operate more efficiently

24  Specialization – people focus on a specific purpose/task  Specialization – the separation of tasks within a system; people focus on a specific purpose/task  Division of Labor – Workers perform fewer tasks in order to operate more efficiently

25 Glynn Academy – teachers in different departments Glynn Academy – teachers in different departments Each teacher can master their content Each teacher can master their content Present it in the most efficient manner possible Present it in the most efficient manner possible Specialization Examples Social Studies Math Science English

26 Specialization Examples Rancher Publix Worker Slaughter HouseMeat Cutter Final Good (Output) Consumer Good

27 Productivity – average amount of output (good or service) per unit of input (labor, machine, etc.) Productivity – average amount of output (good or service) per unit of input (labor, machine, etc.) Increased productivity means to do more with less Increased productivity means to do more with less Capital investments allow increased efficiency Capital investments allow increased efficiency Specialization and Efficiency

28 Productivity – average amount of output (good or service) per unit of input (labor, machine, etc.) Productivity – average amount of output (good or service) per unit of input (labor, machine, etc.) Increased productivity means to do more with less Increased productivity means to do more with less Capital investments allow increased efficiency Capital investments allow increased efficiency Specialization and Efficiency

29 Mary looks over reports on four of her workers. Jack made 25 baskets in 5 hours. Walter made 36 baskets in 6 hours. Rudy made 40 baskets in 10 hours. Sam made 22 baskets in 4 hours. Jim made 50 baskets in 10 hours. Who has the greatest productivity?Productivity Jack 25/5 = 5 Baskets per hour Walter 36/6 = 6 Baskets per hour Rudy 40/10 = 4 Baskets per hour Sam 22/4 = 5.5 Baskets per hour Jim 50/10 = 5 Baskets per hour Walter has the greatest productivity

30 Productivity Creates Wealth 29 3rd World CountriesDeveloped Countries

31 Household – Person or group of people living in a residence Household – Person or group of people living in a residence Consumers - use the finished goods and services (outputs) to satisfy wants and needs Consumers - use the finished goods and services (outputs) to satisfy wants and needs Firm – business, organization that uses factors of production (inputs) to produce a product, which it then sells Firm – business, organization that uses factors of production (inputs) to produce a product, which it then sells Suppliers – transform “inputs” (F.O.P.) into “outputs” (products) Suppliers – transform “inputs” (F.O.P.) into “outputs” (products) Household – Person or group of people living in a residence Household – Person or group of people living in a residence Consumers - use the finished goods and services (outputs) to satisfy wants and needs Consumers - use the finished goods and services (outputs) to satisfy wants and needs Firm – business, organization that uses factors of production (inputs) to produce a product, which it then sells Firm – business, organization that uses factors of production (inputs) to produce a product, which it then sells Suppliers – transform “inputs” (F.O.P.) into “outputs” (products) Suppliers – transform “inputs” (F.O.P.) into “outputs” (products) Households and Firms

32 Product Markets – Households and firms interact; producers sell their goods and services to consumers Product Markets – Households and firms interact; producers sell their goods and services to consumers Households are buyers of goods and services Households are buyers of goods and services Firms are sellers of goods and services (outputs) Firms are sellers of goods and services (outputs) Product Markets – Households and firms interact; producers sell their goods and services to consumers Product Markets – Households and firms interact; producers sell their goods and services to consumers Households are buyers of goods and services Households are buyers of goods and services Firms are sellers of goods and services (outputs) Firms are sellers of goods and services (outputs) Product Markets

33 Factor Markets – the markets where productive resources (F.O.P)/Inputs are bought and sold Factor Markets – the markets where productive resources (F.O.P)/Inputs are bought and sold Labor - Firms (businesses) hire workers and pay them salaries Labor - Firms (businesses) hire workers and pay them salaries Land - Purchased/rented land Land - Purchased/rented land Capital - Use money from households (savings, investment, etc) to purchase capital goods Capital - Use money from households (savings, investment, etc) to purchase capital goods Factor Markets – the markets where productive resources (F.O.P)/Inputs are bought and sold Factor Markets – the markets where productive resources (F.O.P)/Inputs are bought and sold Labor - Firms (businesses) hire workers and pay them salaries Labor - Firms (businesses) hire workers and pay them salaries Land - Purchased/rented land Land - Purchased/rented land Capital - Use money from households (savings, investment, etc) to purchase capital goods Capital - Use money from households (savings, investment, etc) to purchase capital goods Factor Markets

34 Factor Market Market for F.O.P Households sell Firms buy Firms ( Business) Produce and sell Goods and Services Hire and use F.O.P. Households Buy and Consume Goods and Services Own and sell the F.O.P Product Market Market for Goods and Services Firms sell Households Buy Circular Flow Model of Economic Activity – shows the flow of money and goods/services from and to businesses and households Consumer Spending Consumer Goods and Services Final Goods and Services Sold Business Income/Revenue Land, Labor, Capital - provided by household Inputs for Production (F.O.P.) Payment for F.O.P. – Rent (Land) Wages (Labor), Interest (Capital), Profit (Entrepreneurs) Income to Households/Individuals

35 Application Questions 1. In the factor market, what do businesses provide households? 2. The flow of goods and services in the product market is represented by which firm and products on the model below? 3. When you apply for a job at the local Starbucks which market are you in? 4. Which color arrows represent the flow of money; what color arrows represent the flow of inputs and outputs. 1. In the factor market, what do businesses provide households? 2. The flow of goods and services in the product market is represented by which firm and products on the model below? 3. When you apply for a job at the local Starbucks which market are you in? 4. Which color arrows represent the flow of money; what color arrows represent the flow of inputs and outputs. Income/payment the F.O.P Starbucks/Coffee Factor Blue/Tan

36 Daily Assignment - Circular Flow Model of Economic Activity Household 1.________________________ Firm Firm 1. _____________________________ Firm 2. _____________________________ Factor Market Product Market Consumer Spending 1. _________________________ Goods Purchased 1. ______________________________ 2. _______________________________ Goods Offered 1. ___________________________ 2. ___________________________ Business Income 1._________________________ Factor of Production Offered 1. ___________________________ Input for Production 1. ___________________________ Payments for F.O.P 1. _________________ Weekly Income 1. __________________

37 Daily Assignment - Circular Flow Model of Economic Activity Household 1.________________________ Firm Firm 1. _____________________________ Firm 2. _____________________________ Factor Market Product Market Consumer Spending 1. _________________________ Goods Purchased 1. ______________________________ 2. _______________________________ Goods Offered 1. ___________________________ 2. ___________________________ Business Income 1._________________________ Factor of Production Offered 1. ___________________________ Input for Production 1. ___________________________ Payments for F.O.P 1. _________________ Weekly Income 1. __________________

38 Circular Flow Model of Economic Activity Household 1.________________________ 2.________________________ Firm Firm 1. _____________________________ Firm 2. _____________________________ Factor Market Product Market Consumer Spending 1. _________________________ Goods Purchased 1. ______________________________ Goods Offered 1. ___________________________ 2. ___________________________ 3.___________________________ Business Income 1._________________________ Factor of Production Offered 1. ___________________________ Input for Production 1._________________________ 2._________________________ 3.________________________ Payments for F.O.P 1.________________ 2.________________ 3.________________ Weekly Income 1. __________________ Elisa Marcella Cilantros Books a Million Tacos Burritos Fajitas Fajitas 9.49 Labor/Salesperson Stockers Coffee Sellers Cashiers Lease 2200 – Electric Water

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40 Economic Freedom Competition Private Property Rights Self-InterestVoluntary Exchange Description Profit Motive Description American Free Enterprise Example 1. Example 1. Example 1. Example 1. Example 1.

41  Description - Individuals’ right to choose your occupation and what to buy.  Firms’ right to hire or produce.  The right to conduct yourself with little government interference.  Examples:  1. I had the freedom to become a teacher and a coach; I can buy whatever I want.  2. Firms range from automakers to fast food. Economic Freedom

42  When individuals willingly engage in a transaction where both parties benefit.  Allows people to decide what and when they want to buy and sell, rather than forcing them to buy and sell at particular times or specific prices  Examples:  When I get a haircut, I get a fresh look, Sportsclips gets my money  When I buy gasoline, I get energy for my car, the firm gets my money Voluntary Exchange

43  Description – Individuals and businesses have the right to buy and sell as much property as they want  Property owners can prohibit others from using their property  The fifth amendment protects us from the federal or state governments taking our property for their own use.  Examples:  Households and firms are encouraged to own property and enjoy the protection of the property  Firms can own and operate their business with limited interference from the government Private Property Rights

44  The force that encourages people and organizations to improve their material well-being  Examples  Many people in our society are driven by the desire to make money, which ultimately benefits the market  People in the U.S. are rewarded for innovations and efficiency via cash incentives Profit Motive

45  Competition – efforts among sellers/producers to attract consumers at various prices  At the heart of market economic philosophy  Examples:  Mcdonalds vs. Burger King  Walmart vs. Target Competition

46 Circular Flow Model of a Mixed Economy Households Firms Factor Market Product Market Consumer Spending/Investing Goods and Services Purchased: Goods and Services Sold Business Income/Revenue Land, Labor, Capital, Entrepreneur Inputs for Production (F.O.P.) Payment for F.O.P. – Wages, rent, capital goods Income to Households/Individuals Taxes Expenditures Taxes

47  Government acts an informer, protector, provider, and regulator  Government has the responsibility to protect property rights, contracts and other business activities Role of the Government in a Market Economy

48  Government has the responsibility to protect property rights, honor contracts, protect against discrimination, monopolies or unfair business practices Role of the Government in a Market Economy

49  Role of the Government as Informer:  Make sure that producers provide consumers with accurate information  Consumers use govt. info. to protect themselves from dangerous products and fraudulent claims. Role of the Government as Informer

50  Role of government as a protector:  Federal government acts to preserve competition, regulates airlines, communications, banking, etc.  Though they do not control it, they impose various restrictions on the private market  Gas stations, must dispose of used motor oil properly  Zoning laws, prevent homeowners from running businesses out of their homes Role of Government as Regulator

51  Government regulation can have negative effects on businesses and consumers  Negative effects: 1. Government rules can increase the cost of business 2. Stifled competition can lead to high prices 3. Increase of governmental spending can lead to higher taxes Negative Effects of Regulation

52  Public sector- the part of the economy that involves the goods provided by the government  Private sector- the part of the economy that involves the goods provided by private firms Government as a Provider

53  Public Good/Service - A shared good or service for which it would be impractical to make consumers pay individually and to exclude nonpayers.  Education, military, National Park, Snow Removal, Fireman Public Goods and Services

54  When the government takes from one group and reallocates to another group  Welfare, Social Security, Unemployment, Food Stamps, etc. Redistribution of Income

55  The market, on its own, does not distribute resources efficiently, choices made by individuals determine what goods get made, how, and how much  Free riders, monopoly, roads and bridges in a sparsely populated area, etc. Market Failure

56  Negative Externality – negative effects experienced by people that had no part in the consumption of a good or service  Cigarette smoker, chemical waste dumping, foreclosures and property values, etc. Negative Externalities

57  Negative Externality – negative effects experienced by people that had no part in the consumption of a good or service Negative Externalities

58  Goods/services that generate benefits to many people, not just those who pay for the goods  Education, better technology, medicine, etc. Positive Externalities

59 Free-Rider Problem  A free rider is someone who would not choose to pay for a certain good or service, but who would get the benefits of it anyway if it were provided as a public good

60  Write an example of a negative and positive externality.  What kind of government regulation could be used to eliminate your negative externality? Application Question

61 Command – central authority owns and operates the Factors of Production Command – central authority owns and operates the Factors of Production Centrally Planned Economy – central government answers the three economic questions; WHAT to produce, HOW to produce, and FOR WHOM to produce Centrally Planned Economy – central government answers the three economic questions; WHAT to produce, HOW to produce, and FOR WHOM to produce Oppose private property, free market pricing, economic freedom Oppose private property, free market pricing, economic freedom Command Economies

62 Karl Marx – German social philosopher that studied economic systems in Europe Karl Marx – German social philosopher that studied economic systems in Europe Communist Manifesto – written by Marx and Frederick Engels became basis for modern-day command economies Communist Manifesto – written by Marx and Frederick Engels became basis for modern-day command economies Thought capitalism would fail because it put too much wealth in the hands of few and left everyone else poor Thought capitalism would fail because it put too much wealth in the hands of few and left everyone else poor Believed in a “no-class” system, where all share in wealth/power Believed in a “no-class” system, where all share in wealth/power Socialism – distribution of wealth and F.O.P. equally amongst society Socialism – distribution of wealth and F.O.P. equally amongst society Communism – political and economic system with centralized economic decision-making Communism – political and economic system with centralized economic decision-making Authoritarian Government – exact strict obedience from their citizens; do not allow individual freedom Authoritarian Government – exact strict obedience from their citizens; do not allow individual freedom Socialism and Communism

63 1. What was Adam Smith’s ethnic and professional background? 2. What was the name of the book that he published; when was it published? 3. What did Smith identify in the book? 4. What did he assert about specialization and division of labor? 5. What did he believe about the role of government in the economy? 6. Define the French term Laissez Faire; why did Smith believe in Laissez-Faire economics? 7. What is meant by his metaphor of the Invisible Hand? 8. How do both consumers and businesses benefit from this philosophy? Chapter 2 Section 2 – Daily Assignment Economic Profile Adam Smith pgs. 33 Scottish, Philosopher, Professor Wealth of Nations Land, labor and capital as the factors of production that generate wealth Productivity increases through specialization Government must leave individuals as free as possible to pursue their interests Individuals try to pursue their own self-interest will benefit all of society Let them do as they please Consumers buy what they want, producers supply for profit

64 1. How did the Soviet Union arise? 2. Where did Soviet planners allocate the factors of production? 3. How did the Soviet Union control agriculture? 4. What three industries did Soviet Planners favor? 5. How did the Soviet Union view entrepreneurial endeavors? 6. What was the quote used by Soviet consumers as a joke? 7. Why were Soviet Consumers’ left unsatisfied? Page 39 – Russia in Crisis 1. How did many Russians initially respond to the Communist collapse? 2. What happened over the next decade? 3. How did Russia deal with corruption? 4. What were some characteristics of Russia’s financial problems? 5. What evidence can be seen that success is in sight? Chapter 2 Section 3 – Daily Assignment Questions “The Former Soviet Union” pgs

65  Scenario 1 You have two cows. You trade one to your neighbour for a bull. You only produce what you need to survive.  Scenario 2 You have two cows. The State takes both and gives you just enough milk to live  Scenario 3 You have two cows. You sell one and buy a bull. Your herd multiplies, and your wealth grows. You sell your herd and retire on the income. 1. What economic system matches each scenario? 2. Which scenario do you think is the most ideal and why? 3. Which scenario do you think sounds the most like the United States? Why? 4. What countries do you know of that could fall into scenario 2.

66 TraditionCommandMarket What to Produce? How to Produce it? For Whom to Produce? Whatever is necessary for the tribe to survive. Based on tradition, habit and custom; the way its always been done. The tribe Whatever the government tells them to produce. Based on the government. Whoever the government tells them to produce it for. Whatever is in demand by the consumers. The most efficient method possible; technological innovations. Consumers that are willing to purchase.

67 TraditionCommandMarket Advantages Disadvantages Examples Central African Mbuti Australian Aborigines Inuits of Canada Everyone knows their role in society/economy Economic questions are answered based on tradition Discourages new ideas Lack of progress, lower standard of living North Korea Cuba China Former Soviet Union Change economic direction in a short time Health and public services are available at little or no cost (regardless of income) Not designed to meet wants of consumers Does not give incentive to work hard Large decision-making bureaucracy Lack of economic flexibility Lack of economic freedom, profit motive United States Canada Japan South Korea Singapore Germany France Great Britain Western Europe Adjust to change over time Individual economic freedom Limited government interference Decision-making is decentralized Variety of goods and services High degree of consumer satisfaction Does not provide basic needs for everyone Lack of public goods by private markets High degree of uncertainty, job loss, competition Market failures (monopoly)

68 1.What traditions are mentioned regarding American society? 2.List some additional traditions that you have in your family. 3.How did the Inuit exemplify a traditional economic system? 4.How did the State Planning Commission determine the direction of the Soviet economy? 5.What shortcut did Soviet workers take in order to fill their quotas; what did it lead to? 6.How did the State Planning Commission respond to a shortage of male workers? 7.Describe what a “dollar vote” indicates. 8.Describe how the market adjusted from the 1970s gas shortage, to the 1980s. 9.What examples are provided of the various goods and services provided in a market economy? 10.How do both the majority and minority end up satisfied in a market economy? 11.What are the three conditions that must be met to ensure that market economies do not fail? Thanksgiving, bouquet toss, shaking hands Open one present on Christmas Eve Share the spoils of the hunt Determined the needs based on governmental decisions Made their products heavier Made the women go to work Spending money to show firms what to produce People bought less gas-guzzling cars and bought more fuel-efficient ones Internet, electric dog collars, Cable TV Both can get what they want Competition, Flexibility, Access to information

69 Free Enterprise – competition in the marketplace is allowed to flourish with no interference from government Free Enterprise – competition in the marketplace is allowed to flourish with no interference from government Modified Free Enterprise (mixed economy) – businesses are free to compete with some government regulation/intervention Modified Free Enterprise (mixed economy) – businesses are free to compete with some government regulation/intervention Modern Economies North Korea Cuba Iran China Mexico France South Africa Poland Japan United Kingdom Hong Kong Canada Singapore United States Centrally PlannedFree Market

70 Laissez Faire – no government intervention in the economy Laissez Faire – no government intervention in the economy Some government intervention is necessary in the economy; some needs are difficult to answer in the marketplace Some government intervention is necessary in the economy; some needs are difficult to answer in the marketplace National defense, roads and highways, education, etc… National defense, roads and highways, education, etc… Government acts a protector, regulator and overseer of economy Government acts a protector, regulator and overseer of economy Laissez Faire in a Modern Economy

71 Taxes from both households and businesses Taxes from both households and businesses Income tax, state income tax, social security, Medicare/Medicaid, unemployment insurance, etc. Income tax, state income tax, social security, Medicare/Medicaid, unemployment insurance, etc. Government Money

72 Government purchases land, labor, and capital from households Government purchases land, labor, and capital from households United States gov’t pays 2.8 million employees $9.7 billion for labor United States gov’t pays 2.8 million employees $9.7 billion for labor Government in the Factor Market

73 Government purchases goods and services from firms (businesses) Government purchases goods and services from firms (businesses) Office supplies, telephones, computers, etc. Office supplies, telephones, computers, etc. Government in the Product Market

74 Economic GoalsMarketCommandTradition Economic Freedom Yes - People can produce what they want, how they want to and for whom No - Many aspects of economic activity are tightly controlled by the government No - Extremely limited, a person’s role in society is based on custom, heritage and tradition Economic Efficiency Economic Security Economic Predictability Economic Equity Economic Growth Economic Innovation Yes – specialization, wise use of resources leads to profit No – Many resources go unused, Cuba 50% of fertile land is not utilized Yes/No – Tribal living does not waste resources/lack modern standards of efficiency and growth No – a pure market economy prescribes to laissez faire. (mixed economies have some safeguards) Yes - employment and government sponsored programs are assured Some – your job and provisions are guaranteed by your tribe Yes – most market economies have high levels of resource predictability No – command economies struggle to meet the needs of the consumer No – in most cases unpredictable, because resources can become scarce Yes – fairly paid based on your skills No – private incentive, profit motive do not exist No – based on customary means of production not fair pay for acquired skills Yes - a fast rate due to competition and profit motive Slow - lack of growth because of a lack of efficiency and profit motive No - lack of growth due to a lack of productivity and innovation Yes – innovation and technology leads to profit Limited – lack of innovation because of a lack of profit motive No – lack of modern innovations

75 1.Traditional Economy 2.Command Economy 3.Market Economy 4.Market 5.Free Market 6.Specialization 7.Division of Labor 8.Household 9.Consumer 10.Firm 11.Supplier 12.Product Market 13.Factor Market 14.Centrally Planned Economy 15. Socialism 16. Communism 17. Authoritarian 18. Laissez-Faire Chapter 2 – VIS Terms Junk!!!

76 Using the Chart Below, identify each groups Economic Goals and Societal Values and the picture they used to represent each goal. Group NumberEconomic GoalPicture

77 1. Name 2. Date (1-30) 3. Class Period 4. Chapter 2 Test 5. ID: A, B, C Junk!!!

78 1. Economic Systems D.A. 2. Video Questions - North Korea 3. Circular Flow (Elisa and Marcella) 4. Comparing Economic Systems - Reflection Questions and Chart 5. Free Enterprise Flow Chart 6. Study Guide Chapter 2 7. CW Puzzle 8. Terms Ch Daily Tens (9) 10. Essential Questions (3) 11. Notes 12. Test Standard Sheet (include original test answers + corrections) Junk!!!

79 1. Economic System 2. What to produce, How to produce them, Who to produce them for 3. Economic: efficiency, freedom, security, predictability, equity, growth, innovation, additional goals 4. Tradition, custom, ritual, habit 5. Central planners dictate the what, how, for whom 6. Buying and selling of households and firms 7. Market 8. Market economy 9. Capitalism 10. Households and Firms 11. Input is something used to produce and output, which is a final good or service 12. Product 13. Factor 14. Adam Smith, Wealth of Nations

80 15. Be limited in its role in the economy, “Let them do as they please”. 16. Invisible Hand 17. See Circular Flow 18. a) Product b) when it changed hands from the household to the firm c) Factor, labor d) Grills, hostesses, cashiers e) Factor 19. Karl Marx, Communist Manifesto 20. That it would fail because it put too much money in the hands of the rich and not in the hands of the poor 21. Communism, Socialism 22. Authoritarian 23. Economic Freedom 24. Property Rights 25. Profit Motive 26. Voluntary Exchange 27. Competition

81 1. Name 2. Date (9-4) 3. Class Period 4. ID: A, B or C 5. Test Economics Systems

82 15. Economic Freedom 16. Property Rights 17. Profit Motive 18. Voluntary Exchange 19. Competition

83 1.Give an example of a positive and negative incentive. 2.Explain why the United States is not a true “pure market/free enterprise” system. Extra Credit

84 1.Which type of economic system do you think is the best method for allocating scarce resources? Explain why. 2.Other than the goal that you identified on your test, write the one that you think is the next most important. Explain why. Extra Credit

85 Economic Goal and Societal Values SummaryExample 1.Economic Efficiency 2.Economic Freedom 3.Economic Security and Predictability 4.Economic Equity 5.Economic Growth and Innovation 6.Additional Goals Making the most of scarce resources Manufacturer knowing the best way to use resources wisely (Assembly Line) Freedom from government intervention in the production and distribution of goods/services Working where you want, spending money the way that you want, owning a business, etc. Knowing that goods and services will be available, payments made on time, government will provide a safety net in times of economic downturns Security – Unemployment Checks, Social Security, Stimulus Money Predictability – gas at gas pumps, food at store Fairness, being paid according to your skill level, not being discriminated against Lawyers earn more than nurses, computer programmers more than truck drivers Economic growth refers to improving standard of living and GDP. Innovation, improving existing technology. Agricultural age to industrial age to information age. Innovations in computers, communication. Future goal for society. Environmental protection, full employment, universal medical care.

86 Circular Flow Model of Economic Activity Households Firms Factor Market Product Market Consumer Spending/Investing Goods and Services Purchased: Caramel Frappuccino Goods and Services Sold Business Income/Revenue Land, Labor, Capital, Entrepreneurs Inputs for Production (F.O.P.) Payment for F.O.P. – Wages, rent, capital goods Income to Households/Individuals

87 1. How do each of the economic systems answer the three economic questions? 2. How does the Circular Flow model show a market economy? Essential Question # Tradition – based on habit, ritual, custom 2. Market - based on buyers and sellers 3. Command – based on central planners/government 4. Mixed – market based with some government regulation Flow of money from households to firms (product market), firms to households (factor market). Flow of final goods and services (outputs) to households (product market), and factors of production (inputs) to the firm (factor market). 3. What do the economic and social goals help us to understand? Explain how each society provide goods and services for their people in light of scarce resources.

88 1. How do each of the economic systems answer the three economic questions? Essential Question #1 1. Tradition – based on habit, ritual, custom 2. Market - based on buyers and sellers 3. Command – based on central planners/government

89 3. What do the economic and social goals help us to understand? Essential Question # 3 Explain how each society provide goods and services for their people in light of scarce resources.

90

91 "Winning is not a sometime thing; it's an all the time thing. You don't win once in a while; you don't do things right once in a while; you do them right all the time. Winning is a habit. Unfortunately, so is losing. There is no room for second place. There is only one place in my game, and that's first place. I have finished second twice in my time at Green Bay, and I don't ever want to finish second again. There is a second place bowl game, but it is a game for losers played by losers. It is and always has been an American zeal to be first in anything we do, and to win, and to win, and to win. Every time a football player goes to play his trade he's got to play from the ground up-from the soles of his feet right up to his head. Every inch of him has to play. Some guys play with their heads. That's O.K. You've got to be smart to be number one in any business. But more importantly, you've got to play with your heart, with every fiber of your body. If you're lucky enough to find a guy with a lot of head and a lot of heart, he's never going to come off the field second. Vince Lombardi “What it Takes To Be Number 1”

92 Running a football team is no different than running any other kind of organization-an army, a political party or a business. The principles are the same. The object is to win-to beat the other guy. Maybe that sounds hard or cruel. I don't think it is. It is a reality of life that men are competitive and the most competitive games draw the most competitive men. That's why they are there-to compete. To know the rules and objectives when they get in the game. The object is to win fairly, squarely, by the rules-but to win. And in truth, I've never known a man worth his salt who in the long run, deep down in his heart, didn't appreciate the grind, the discipline. There is something in good men that really yearns for discipline and the harsh reality of head to head combat. I don't say these things because I believe in the "brute" nature of man or that men must be brutalized to be combative. I believe in God, and I believe in human decency. But I firmly believe that any man's finest hour, the greatest fulfillment of all that he holds dear, is that moment when he has worked his heart out in a good cause and lies exhausted on the field of battle - victorious."...Vince Lombardi Running a football team is no different than running any other kind of organization-an army, a political party or a business. The principles are the same. The object is to win-to beat the other guy. Maybe that sounds hard or cruel. I don't think it is. It is a reality of life that men are competitive and the most competitive games draw the most competitive men. That's why they are there-to compete. To know the rules and objectives when they get in the game. The object is to win fairly, squarely, by the rules-but to win. And in truth, I've never known a man worth his salt who in the long run, deep down in his heart, didn't appreciate the grind, the discipline. There is something in good men that really yearns for discipline and the harsh reality of head to head combat. I don't say these things because I believe in the "brute" nature of man or that men must be brutalized to be combative. I believe in God, and I believe in human decency. But I firmly believe that any man's finest hour, the greatest fulfillment of all that he holds dear, is that moment when he has worked his heart out in a good cause and lies exhausted on the field of battle - victorious."...Vince Lombardi Vince Lombardi “What it Takes To Be Number 1”

93 1. Do you agree with Vincent Lombardi’s assertion that people are born with the desire to compete why or why not? 2. What areas do you see competition in the economy of the United States ? 3. How is competition beneficial to our economy/society? 4. How is it harmful to our economy/society? Competition Article


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