2 Student Notes…Pay Attention! This family has anECONOMIC PROBLEM!WHY?I need new pom-poms!I want a new snowboard!Don’t these kids know that money doesn’t grow on trees?!Meet the NormalFamily:
3 Because WANTS are UNLIMITED and RESOURCES are LIMITED!
4 3 Types of Resources NATURAL RESOURCES: soil, fish, minerals, etc. HUMAN RESOURCES: people and their skills and knowledgeCAPITAL RESOURCES: money or anything that can be used as collateral to get money (property, rare metals, etc.)
5 RESOURCES are known as FACTORS OF PRODUCTION (FOP) in ECONOMICS (meaning you need all three in order to produce goods and services) NATURAL RESOURCES = LAND HUMAN RESOURCES = LABOUR CAPITAL RESOURCES = CAPITAL LAND + LABOUR + CAPITAL = FOP
6 A LIMITED SUPPLY of any RESOURCE (or FOP) is called SCARCITY A LIMITED SUPPLY of any RESOURCE (or FOP) is called SCARCITY. EVERY society deals with SCARCITY. The way a society deals with scarcity defines its ECONOMIC SYSTEM.
7 Other Words for Scarcity? ShortageDeficitShortfallDecreased AmountRareFewLimited
8 The 3 Basic Economic Questions (3BEQs) (how a society attempts to deal with scarcity) What is needed or wanted?How will it be produced?Who will get it?How these questions are answered determines a country’s economic system. Sometimes the government makes the decisions, sometimes it doesn’t. For example:
9 The Economic Continuum LeftCenterRightCommunistCentrally PlannedTotalitarianPlannedSocialistMixedModified MarketCapitalistMarketFree EnterpriseLaissez Faire
10 Left (Planned) gov’t answers 3BEQs gov’t owns and manages FOP gov’t plans what will be produced gov’t decides how to use resourcesindividuals have little influence on gov’t decisionsconsumers have no say in economy
11 Centre (Mixed)combines private ownership and gov’t control to answer 3BEQsprivate businesses own and manages some FOPgov’t owns and manages some FOP (CROWN CORPORATIONS)gov’t control of economy varies depending on who is in powerconsumers have some say in economy
12 Right (Market) private business and consumers answer 3BEQ private businesses own and manage FOPconsumers determine what is needed or wantedproducers meet consumer demandbusiness succeeds if they produce what consumers wantno gov’t involvement in business
13 ECONOMIC SYSTEMS can SHIFT LEFT or SHIFT RIGHT depending on social and political factors affecting the economy, such as VALUES, STANDARD OF LIVING and QUALITY OF LIFE.
14 What do Economic Systems Value? The PUBLIC GOOD is about what’s BEST for society as a WHOLE. Governments differ on how to achieve it.COOPERATION: set aside individual interests to meet the needs of the group; recognizes needs and circumstances; values EQUITY INDIVIDUALISM: what’s best for individuals will add up to what’s best for society; values creativity and INDEPENDENCE.
15 Shanghai China Mexico Russia Britain North Korea There are extremes at either end of the continuum. Can you think of some examples of other countries we can place on the continuum?Shanghai China Mexico Russia Britain North Korea
16 LET’S COMPARE: CANADA’S ECONOMY “Peace, order, and good government” reflects idea of cooperationgov’t makes economic decisions on behalf of citizensMIXED because citizens, business and gov’t make economic decisionsGov’t operates Crown Corporations when it is in the public interest to do so because:it’s too expensive for private business to operate, or,the population is too small for the business to be profitable for an individual or company
17 LET’S COMPARE: cont. USA’S ECONOMY “life, liberty, and the pursuit of happiness”spirit of individualism based on history of independencevalues individual economic decision-making; gov’t does not like to intervenemarket forces determine economyworks through forces of competition and the idea of supply and demandfederal gov’t only controls necessary services (some social supports, postal service, some healthcare
18 CANADA’S ECONOMY “Peace, order, and good government” SHIFT LEFTuniversal healthcareCanada Pension Plan for seniorsestablish Crown Corporations Air Canada, CBC, Via Rail, Canada Post, AGT
19 CANADA’S ECONOMY “Peace, order, and good government” SHIFT RIGHTcuts in gov’t spendingprivatize crown corporations (Air Canada, Via Rail, AGT=Telus)NAFTA increases influence of market in economy
20 USA’S ECONOMY “life, liberty, and the pursuit of happiness” SHIFT LEFTOld Age Security for seniorsFarm support (subsidies)Public works projects (roads, dams, bridges…)USPS
21 USA’S ECONOMY “life, liberty, and the pursuit of happiness” SHIFT RIGHTreduced gov’t spendingreduced regulations/rules on trade
22 What could be considered NEEDS? WANTS? What are some of the things people living in either country might value in terms of STANDARD OF LIVING and QUALITY OF LIFE? Let’s make a comparison:What could be considered NEEDS? WANTS?
23 Coming up next:What is the relationship between SCARCITY and SUPPLY and DEMAND?What role does COMPETITION play in an economic system? What is the relationship between SCARCITY and COMPETITION?