3Economics Economics- The study of how people get what they want. Production- how things are madeDistribution- how you get the itemsConsumption- using the itemsNatural Resources-gift of nature
4SCARECITYThere is an unlimited amount of need, but a limited amount of resources.
5Currency- ExamplesU.S.-DollarMexico-PesoEuropean Union- Euro
6Brain Jogger Scarcity ___ A. using a product or service Instructions: Get out a half sheet of paper and number to 8. Match the definitions with the correct definition.Brain JoggerGScarcity ___ A. using a product or serviceProduction ___ B. The study of how people getEconomics ___ what they want and need.Consumption ___ C. Gifts of NatureDistribution ___ D. A person who decides to buy orNatural Resources ___ use a good or service.Consumer ___ E. Getting items to consumersCurrency ___ F. MoneyG. Unlimited Needs, LimitedresourcesH. Making a Product to sell or tradeHBAECDFPlease put how many they got right over 8.Ex: they miss 2 would look like 6/8
9Economic SystemsWHAT TO PRODUCE? (What kinds of goods and services should be produced?)HOW TO PRODUCE? (What productive resources are used to produce goods and services?)FOR WHOM TO PRODUCE? (Who gets to have the goods and services?
10Three Types of Economic Systems: 1. Traditional Economy2. Command Economy3. Market Economy* Most countries are… Mixed Economies! (Market + Command)
11Market Economy Is an economy system managed by the people. Based on supply and demand.Doritos has increased sales!!! Because people can’t resist them!!!Doritos increases their prices!!! Until.. People do not buy as many DoritosI love Doritos!!! And so does everyone else!!!
12Market Economy Who decides what to produce? Businesses base decisions on supply and demand and free enterprise (PRICE)Who decides how to produce goods and services?Businesses decide how to produce goodsWho are the goods and services produced for?consumers
13Market EconomyThere are no truly pure Market economies, but the United States is close.
14Market Think, Pair, Share Pros Cons People get more choices and they get to have a say.Govt. does not tell you what to do.Govt. does not get to protect the consumer.Greed can control business decisions.
154 minutes (two sentences) Brain JoggerWhich would you rather live in? A Pure Command or a Pure Market economy. Why?4 minutes (two sentences)
16Command Economy The government controls the economy What goods and services are sold, produced.What jobs people can have.
17Command Economy Who decides what to produce? Government makes all economic decisionsWho decides how to produce goods and services?Government decides how to make goods/servicesWho are the goods and services produced for?Whoever the government decides to give them to
18Command SystemCountries with communist governments have Command economiesExamples: There are no truly pure command economic systems, but close countries are: North Korea, former Soviet Union, Cuba*Germany and Russia have moved away from having a Command economy since Now they have a Mixed economy.
21Think, Pair, Share Command Pros Cons Government inspected product/serviceMore people might receive servicesPeople have jobsGovt. does not have competitionProduct usually have poor qualityNot what the consumer wants
22Traditional EconomyEconomy based on traditions, routines, and beliefs.The product is usually sold in a market
23Traditional Economy Who decides what to produce? People follow their customs and make what their ancestors made (Look to the PAST)Who decides how to produce goods & services?People grow & make things the same way that their ancestors did (Look to the PAST)Who are the goods & services produced for?People in the village who need them
24Traditional Economy Examples: Villages in Africa and South America the Inuit tribes in Canadathe caste system in parts of rural Indiathe Aborigines in Australia
25Think, Pair, Share Traditional Pros Cons You know what you will do the rest of your lifeLimited resources/tech.Limited selectionYou know what you will do the rest of your lifeYou can Barter for goods/servicesProducts are of good quality.
26Economic Systems Market Command Traditional ….But No Country has a 100% Market, Command, or Traditional EconomySo……What do they have?
27Economy Continuum Mixed Economy Pure Command Economy Pure Market Economy
28Mixed EconomyIt is a mixture of state and private ownership and control.Every economy is mixed.The post office is run by the governement!Farmers Markets are run by the people.Railways can be run by the government.
29Mixed Economy Who decides what to produce? Businesses AND the government decide what to produceWho decides how to produce goods & services?Businesses AND the governmentWho are the goods & services produced for?Consumers
30Brain Jogger Traditional A. Controlled by the Govt. Command B. Controlled by the past.Market C. Mixture of private and govt. control.Mixed D. Controlled by the people
31Economy Continuum Command Market Russia 50.5% North Korea 1% Cuba 27.7%Germany 71.8%U.S.77.8%U.K.74.5%Australia82.5%North KoreaAustraliaU.S.GermanyRussiaCubaU.K.
32Guess that Economy I will give you an example of a country’s economy. You need to tell me what type of economic system they have.
33Example # 1If my father and mother make baskets in a small village in Yemen and they are training me to take over their business when they die, what type of economic system is being described?
34Example # 2McDonalds comes out with a new type fries made out of asparagus. After a couple months, McDonalds sees that none of their customers are buying the new fries, so they stop selling them. This is an example of ________.
35Example # 3The government of Saudi Arabia tells it citizens that they can only buy their government made tires, and no other country's or company's tires. This is an example of ________.
36Example #4The USA, for the most part, lets people make the economic decisions in the country, but the government does step in to make sure that citizens are not taken advantage of by other people or companies. This is an example of ________.
37ActivityTake the assigned economy and answer the following questions and charts:QuestionsAnswersImpactsWhat type of economy do you have?What is your country’s name?Where is your country located?What type of businesses do you have?Who makes most of the important economic decisions in your country?Complications with your economy:
38Brain JoggerWhy is a Mixed Economy not considered an economic system like command, market, and traditional economies?Two sentences please.
39GDPGDP or Gross Domestic Product is the sum of goods and services produced in an economy during a period of time (usually a year).The Gross Domestic Product measures the value of economic activity within a country.GDP
40Investment in Human Capital (education and training)By investing in human capital, you increase production, improve company, increase GDP.
41Investment in capital (factories, machinery, and technology) By investing in capital, you increase production, improve company, increase GDP.
42EntrepreneurOne who innovates and takes risks in developing a product or business.
43Natural Resources Affect Growth If a country has a lot of resources, great! It will help their economy.But they must also invest in other things too!!!Climate also affects growth. (Drought does not help things)Nigeria has a lot of oil, but did not invest in farming.
44Hard for companies to Invest in Africa Why?Unstable governments and corruption.Weak work force13% of South Africans are HIV positive (AIDS)Poor work conditionsYou’re not getting my money!!