1. Page 1 Copyright © Texas Education Agency, 2011. All rights reserved. The World of the Market Economy

2. Page 2 Copyright © Texas Education Agency, 2011. All rights reserved. “Copyright and Terms of Service Copyright © Texas Education Agency. The materials found on this website are copyrighted © and trademarked ™ as the property of the Texas Education Agency and may not be reproduced without the express written permission of the Texas Education Agency, except under the following conditions: 1)Texas public school districts, charter schools, and Education Service Centers may reproduce and use copies of the Materials and Related Materials for the districts’ and schools’ educational use without obtaining permission from the Texas Education Agency; 2) Residents of the state of Texas may reproduce and use copies of the Materials and Related Materials for individual personal use only without obtaining written permission of the Texas Education Agency; 3) Any portion reproduced must be reproduced in its entirety and remain unedited, unaltered and unchanged in any way; 4) No monetary charge can be made for the reproduced materials or any document containing them; however, a reasonable charge to cover only the cost of reproduction and distribution may be charged. Private entities or persons located in Texas that are not Texas public school districts or Texas charter schools or any entity, whether public or private, educational or non-educational, located outside the state of Texas MUST obtain written approval from the Texas Education Agency and will be required to enter into a license agreement that may involve the payment of a licensing fee or a royalty fee.

3. Page 3 Copyright © Texas Education Agency, 2011. All rights reserved. Vocabulary Supply: The amount of goods and services that producers will provide at various prices.

4. Page 4 Copyright © Texas Education Agency, 2011. All rights reserved. Vocabulary Demand: The amount or quantity of goods and services that consumers are willing to buy at various prices.

5. Page 5 Copyright © Texas Education Agency, 2011. All rights reserved. Vocabulary Equilibrium Price: The price at which the amount of supplied and the amount demanded meet.

6. Page 6 Copyright © Texas Education Agency, 2011. All rights reserved. The Nature of Supply and Demand Supply and demand are always changing. Technology, recession, getting hired, getting fired…all play a part in when and how the supply and demand of a product change. A hurricane can cause a huge demand with low supply, only to see equilibrium in the market after hurricane recovery.

7. Page 7 Copyright © Texas Education Agency, 2011. All rights reserved. Vocabulary Profit Motive: The desire to make more money.

8. Page 8 Copyright © Texas Education Agency, 2011. All rights reserved. Economic Systems Traditional Economy ~Family or community based system ~Relies on custom and ritual to make its choices ~ Examples: Aborigines, Amazon Tribes

9. Page 9 Copyright © Texas Education Agency, 2011. All rights reserved. Economic Systems Command Economy ~Centrally controlled ~Government makes all decisions ~ Examples: Cuba, North Korea

10. Page 10 Copyright © Texas Education Agency, 2011. All rights reserved. Economic Systems Market Economy ~Some government involvement ~Relies on consumption choices of its consumers ~ Examples: USA, Canada

11. Page 11 Copyright © Texas Education Agency, 2011. All rights reserved. Review Identify each economic system and give characteristics and examples.

12. Page 12 Copyright © Texas Education Agency, 2011. All rights reserved. Review Define: Supply Demand Equilibrium

13. Page 13 Copyright © Texas Education Agency, 2011. All rights reserved. Review Give an example of a change in the supply and demand of a particular market. Explain the factors that lead to the change.