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Notes Introduction to Economics. Economic Systems Ways we obtain the things we want and need. Wants – make life more comfortable (Xbox 360, $175 shoes,

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Presentation on theme: "Notes Introduction to Economics. Economic Systems Ways we obtain the things we want and need. Wants – make life more comfortable (Xbox 360, $175 shoes,"— Presentation transcript:

1 Notes Introduction to Economics

2 Economic Systems Ways we obtain the things we want and need. Wants – make life more comfortable (Xbox 360, $175 shoes, Candy bar, etc.). Needs – For survival (food, shelter, water). How we obtain things to satisfy wants and needs sets apart types of economies.

3 Types of Economies Traditional – primitive, trade, barter, grow things we need. Ex. Native Indians in Amazon rainforest. Command – Government controls all economic factors: production equip., factories, farms, etc. Ex. Communist countries. Market Economy – decisions made by individual, set own prices based on market. Opposite of Command.

4 Market Economy & Its Freedoms Freedom to Compete with other sellers. Freedom to Own Property for a company. Freedom to Buy and Sell as we want. This is a Free Market.

5 Competition Start a business to make money, or profit. To make profit, must provide a good or service, using a resource. Limited resources = competition for those resources = effect on prices we pay. Resource is scarce (hard to get) and prices rise. Think Oil.

6 Supply and Demand Law of Supply – Prices go up, production goes up. Price drops, production drops. Law of Demand – Prices go up, consumers buy less. Price drops, consumers buy more. Balance to find price high enough to make profit, low enough to interest consumers.

7 Free Enterprise Run business with little interference from Govt. Competition causes lower prices and higher quality. As competition makes a healthy market, monopolies are illegal. Monopoly is a company with no competition. Can set own prices and reduce quality without consequences.

8 Production Goods and Services are the things that are produced by a group’s economy. Goods – physical products that are manufactured or made that can be owned. Ex. Stereo, TV, Car, Cheeseburger. Services – not physical, but things people do. Ex. Doctor visit, computer repair, haircut.

9 Types of Services Personal Services – haircut, makeover, physical training, plastic surgery, brain surgery, etc. Repair Services – Car repair, Maytag Man, TV repair, etc. Other Services – Legal advise, retail, banker, lawn mowing, etc.

10 Capitalism Factors of Economy are owned by private citizens, and allows for investment in business of others. Capitalism rewards risk with profit. If profit is large, it is worth a larger risk. Innovation is finding a new way of making, marketing, or distributing a product. A major risk but reaps greater profit. Example: Dell Computers & customized to order.

11 Our Economy Mixed Economy – U.S. mostly a Market Economy, but mixes some elements of other systems. Businesses free to do as please, but regulations are placed by govt. to protect citizens. Ex: Min wage, child labor, pollution regulations. Govt. may control prices and keep monitor economic strength. Ex: Auto industry bailout, subsidies for wheat farmers.

12 American Business Early U.S. – economy was based on local needs and small business. Transportation – Wheels allowed nationwide needs to be met. Flight allows global needs to be met. Growth –Some goods (Cars, oil, electric, steel, etc.) require more space and resources than small businesses can handle. Large machinery.


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