1. Economics 101

2. What is Economics?
The study of how a society uses it’s resources to produce and distribute goods and services, satisfying wants and needs.

3. Economic Resources
Land
Labor
Capitol
Entrepreneurship

4. The Big Problem!!! Scarcity
The problem of unlimited human needs and wants, in a world of limited resources.

5. Type of Economic Systems
Determines:
What will be produced?
How will it be produced?
Who will share in what is produced?

6. Traditional Economy
Economic system that relies on habit, custom, or ritual to decide questions of production and consumption of good and services

7. Traditional Economy
Means of the Production is basically owned by the whole economic group
Decisions are based on custom and tradition – like the ancestors did
There is no competition, only custom and tradition is followed
There is no profit, only enough to survive is produced

8. Traditional System What to Produce? How to Produce?
By custom
What ever was produced before
What to Produce?
How ever it was produced in the past
How to Produce?
Based on sharing
For Whom to Produce?

9. Traditional Economy
The main factor for making decisions for the economy is that tradition must be maintained

10. Traditional Economy Pros: Life is stable and predictable Cons:
Lack of progress leads to a lower standard of living

11. Command Economy
Economic system in which the central government makes all decisions on the production and consumption of goods and services

12. Command Economy Means of Production is owned by the government
The government makes all of the decisions for the economy
The government prevents competition from existing
All of the profits go to the government, no profit for the people

13. Command System What to Produce? How to Produce? For Whom to Produce?
Government Decides
Government owns means of production
What to Produce?
How to Produce?
Everyone is treated equally
For Whom to Produce?

14. Command Economy
The main factor in decision making is what ever the government wants the government gets

15. Command Economy
Pros:
Full employment because the government gives everyone a job.
Everyone's basic needs are met
Cons:
Consumer wants are not fully met
Less control over your own life

16. Market Economy
Economic system in which decisions on production and consumption of good and services are based on voluntary exchange in markets

17. The First Economist – Adam Smith
“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” – Wealth of Nations, 1776

18. Market Economy
The Means of Production is owned individually by the people
The people make the decisions by deciding what they want to do or make
Because of the way the economy is set up, there is a lot of competition
Every business is set up to make profits

19. Market System What to Produce? How to Produce? For Whom to Produce?
Consumer choices
What to Produce?
Business chooses most efficient means
How to Produce?
Consumers’ income
For Whom to Produce?

20. Market Economy The main factors in decision making are:
What resources are available?
What does the consumer want?
What do I want to do?

21. Market Economy Pros: Economy can adjust to change over time
High degree of individual freedom
Cons:
Not all basic needs are guaranteed
High degree of uncertainly

22. Mixed Economy
Economic system that combines the free market with limited government involvement

23. Mixed Economy The Means of Production is both public and private
Decisions are made by government and individuals
Most current economies are mixed

24. The US Economic System Mixed Economy Capitalism
Based on 4 important principles
Private Property
Freedom of choice
Profit
Competition

25. Economic Freedom Economic Equity Economic Security Price Stability
Our Economic Goals
Economic Freedom
Economic Equity
Economic Security
Price Stability

26. Economic Freedom
Individuals have freedom to choose their own occupations, employers, and spending habits.
Businesses have freedom to choose how and where to produce goods/services.
Are we meeting this goal?

27. Economic Equity People should receive equal pay for equal work.
People should receive adequate pay for the work they perform.
People should all have the same opportunities to get ahead.
Are we meeting this goal?

28. Economic Security
We should have protection from negative economic events such as layoffs and injuries.
Social Security – federal program that provides disability and retirement benefits.
Everyone should have their basic needs met.
Are we meeting this goal?

29. Price Stability
We should have stable prices that protect against inflation.
Inflation – a rise in the general level of prices.
Are we meeting this goal?

30. When economic goals are not met…
…People get mad!!!!!!!

31. Cool-Down
As you listen, list the economic goals not being met according to artist

32. What must be given up as a result of a decision…
Opportunity Cost
What must be given up as a result of a decision…
"What you would have done if you didn't make the choice that you did".

33. Opportunity Cost What is the opportunity cost of…
Being on a Sports Team
Buying a car
Going to College
Sitting in class right now

34. What’s wrong here…

35. What’s wrong here…