Economic Systems Economic Systems are created to deal with scarcity. Traditional- A type of economic system where all the economic activity comes from rituals, habits, or customs. EX- The Inuit's –Normally found in a community that relies of agriculture or hunter/gathering, (based on trade)
Economic Systems Command- A type of economic system where all the decisions are made by a central authority or government EX- Cuba, North Korea, and China
Economic Systems Market- An Economic system where individuals and firms act in their own best interests. –People make all the decisions with no government interference
Economic Systems Mixed- An Economic system where people are free to make decisions with some government influence Ex- The United States of America
Reading Groups 2 nd Period Group 5 Kelsey Brewer Jackson Jenkins Rachael Piechnik Ashley Williams Taylor Gabbard Zach Williams Group 4 Alex Blackaby Bobbie Carroll Steven Rice Brett Bowen Kody Workman Group 3 Wade Browning Jacob Johnson Alex Clymer Nancy Shoemaker Emilee Feltner Group 2 Jacob Nordheim Clay Thompson Morgan Sydnor Dylan Roseberry Chris Bruin Group 1 Carlee Peters Sidney Dietrich Kaylin Wells Shannon Carey James Holder
Reading Groups 5 th Period Group 5 Garret Partin Edward Bartram Melanie Teegarden Dawn Shaefer Emily Prince Anthony Clower Group 4 Holly Jenkins Dakota Burton Cory Dozier William Neace Trevor Hown Group 3 Courtney Brierly Melanie Hill Sean Neuspickel Hailey York Kenneth Ross Group 2 Zach Risen Ashley Deering Brandon Gibbs Hunter Schalk Cheyenne Meadows Group 1 Taelor McMillin Blake Pollard Erin Fitzpatrick Garret Marshall Caleb Schaller
Reading Groups 7 th Period Group 1 Gowan Brock Kenton Wells Jordan Bishop Chandler Aulick Hannah Sweetland Group 2 Sienna Price Jesse Witt Scribe Zagazeta Tanner Daugherty Dakota Barnes Group 3 Summer Childers Angel Harrison Hannah Lee Ansley Baker Group 4 Anthony Coffman Kevin Trent Darrell Pugh Dakota Spencer Kenton Shoemaker Group 5 Doug Eglian Sammy Ross Alexis Caudill Brent Goins
Reading Groups After you have read you article and answered your questions create a visual representation of the Economic system you are reading about Include –Raw Materials –Production –Distribution –Consumption
Market System Economic system in which supply, demand, and the price system help people make decisions and allocate resources –Same as a Free Enterprise Economy –Normally based on a system of Capitalism, where people own the factors of production
Free Enterprise Economy In the US we live in a Free Enterprise Economy In this Competition is allowed to flourish with a minimum of government influence.
5 Characteristics of a Free Enterprise Economy 1. Economic Freedom 2. Voluntary Exchange 3. Private Property Rights 4. The Profit Motive 5. Competition
Economic Freedom Individuals are free to choose all economic decisions, such as, where and when they want to work: –Days/nights –Indoors/outdoors –In an office/at home –Have your own business/work for someone else –Leave job/Take a new job –What do I want to purchase?
Economic Freedom Businesses also are free to make decisions: –Fire/hire who they want –Produce what goods they want –Decide how much to produce –Sell where they want to sell –Risk success/failure –Charge what they want With Economic Freedom everything is open season!
Voluntary Exchange The act of buyers and sellers freely and willingly engaging in market transactions
Voluntary Exchange Transactions are made in such a way that both the buyer and seller are better off after the exchange –The buyer felt it was worth more than the $ –Seller felt the $ was worth more than the product
Private Property Rights The Privilege that entitles people to own and control their possessions as they wish.
Private Property Rights Private Property includes tangible items such as houses and cars, and intangible items such as skills and talents People have the rights to use or abuse their property as long as they don’t interfere with the rights of others
Private Property Rights Private Property gives individuals the incentive to work, save, and invest, because if you are successful you know you can keep any reward you earn People will own things, because they can do with it what they want
Profit Motive The driving force that encourages people and organizations to improve their material well-being.
Profit Motive Profit- the extent to which persons or organizations are better off at the end of a period than they were at the beginning Entrepreneurs- those who risk entering a business in hopes of making a profit –F.E.E. allows people to risk their $ in a business venture
Competition The struggle among sellers to attract consumers while lowering costs and creating new products Because capitalism is based on freedom and voluntary exchange, buyers compete to find the best products at the lowest price
The Role of the Entrepreneur The Entrepreneur is one of the most important people in the economy The Entrepreneur: –Organizes and manages land, capital, and labor –Starts up new businesses –Creates new products All of this in order to seek the reward called Profit!
The Role of the Entrepreneur Many Entrepreneurs fail Others stay in business with varying degrees of success Only a few manage to be extremely wealthy –Bill Gates –Paul Allen –Nolan Bushnell
The Role of the Entrepreneur Entrepreneurs are the catalyst of a F.E.E. –Starts the action When the Entrepreneur is successful everyone benefits. –The Entrepreneur gets profit and a growing business –The workers are rewarded with a better job (more $) –Consumers are rewarded with new and better products –The Government is rewarded with a higher level of economic activity and larger Tax receipts, used to build roads, schools, libraries, etc. –Everyone Benefits!
The Role of the Entrepreneur When an entrepreneur is successful other industry people rush in to “grab a share” of the profit. To stay competitive the original entrepreneur has to cut prices or improve the quality of his original product (benefits the consumer)
The Role of the Entrepreneur In the end, the entrepreneurs search for profit leads to a chain of events that involves new products, greater competition, more production, higher quality, and lower prices for consumers
The Role of the Consumer Consumers have the power in the economy, because they determine which products will be produced, by what they purchase. If consumers like a product they buy it, if they don’t they wont! Some products make it and some don’t!
The Role of the Consumer Consumer Sovereignty- The consumer is sovereign (has the power) “The costumer is always right!”
The Role of the Government Government has a role, because citizens want them to have a role. –Justified, b/c the benefits outweigh the costs The Government is the: –Protector –Provider of goods and services –Consumer –Regulator –Promoter of National Goals
Protector Enforces Laws –Misleading Ads, unsafe food and drugs, environmental hazards It also protects individual freedoms –Can’t be fired for race, or gender In short, the gov’t ensures an efficient and fair economy
Provider and Consumer The Government provides goods and services –Such as, Education, welfare, bus services, parks, and libraries, etc The Government consumes the same as any other business, putting money back into the economy
Regulator The government is in charge of preserving competition in the market place Regulates different things such as, insurance rates, building zones, Labor laws, and health regulations Government sets rules for individuals protection
Promoter of National Goals The government strives to achieve economic goals of freedom, efficiency, equity, security, full employment, price stability, and economic growth –Social Security –Child Labor Laws –Set Minimum Wage
Mixed Market Economy Modified Private Enterprise Economy People carry on with their economic affairs freely, but are subject to some government intervention and regulation