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LESSON 1.1 MARKET ECONOMIES4/23/2017 LESSON 1.1 MARKET ECONOMIES Compare three types of economies Describe and explain the characteristics of a market economy
Scarcity The conflict between unlimited wants and limited resources.Scarcity is the most basic problem facing economic systems. In order to decide how to use its scarce resources, a country must answer 3 economic questions… © South-Western Educational Publishing
Key Economic Questions1. What to produce? Should resources be used to provide consumer goods, industrial goods, or military goods? 2. How should things be produced? What kinds of industries and equipment should be used? 3. For whom should they be produced? Which of its citizens should benefit most from what is produced? © South-Western Educational Publishing
Types of Economic SystemsTraditional Economy Things are done according to tradition and progress is slow Developing or third-world countries Command Economy The government owns the businesses and controls the economy. Officials make decisions on what /how goods are produced and how they will be shared. © South-Western Educational Publishing
Types of Economic SystemsMarket Economy Businesses and individuals are free to make their own decisions as they buy and sell in the marketplace (where sellers and buyers do business). Generally found in countries that have a democratic form of government. Capitalism,, or free enterprise, means that economic resources are privately owned by individuals rather than by the government. © South-Western Educational Publishing
Characteristics of Market EconomiesPrivate Enterprise An individual's right to own a business, select a market to enter, and produce with limited government direction. Yare free to succeed or fail Private Property You can own, use, sell, and dispose of things of value or things you create. Business properties can include land, buildings, tools, and the goods the business produces. © South-Western Educational Publishing
Characteristics of Market EconomiesProfit The amount of money left over from sales after subtracting all of the expenses of operating the business. The desire to work hard, to be creative, and to satisfy customers in order to earn a profit is called the profit motive. Profit motive helped market economies outperform the other types of economies. © South-Western Educational Publishing
Characteristics of Market EconomiesCompetition The rivalry among businesses to sell their products and services to consumers. Gives consumers the opportunity to choose from a variety of products and services by comparing the quality, prices, appearance, usefulness, and general appeal of products and services.. Encourages businesses to improve their products, services, and customer satisfaction. © South-Western Educational Publishing
LESSON 1.2 MAKE DECISIONS Explain how an economy meets needs and wants4/23/2017 LESSON 1.2 MAKE DECISIONS Explain how an economy meets needs and wants Describe the six-step decision-making process
Needs and Wants Needs are things that are necessary for our survival.Ex: Food, clothing, housing, etc. Wants are things that are not necessary for survival, but add comfort and pleasure to our lives. Ex: Blueray disc player, Xbox 360, Nike shoes, etc. © South-Western Educational Publishing
Goods and Services Goods are things you can see and touch.Ex: Cell phones, I-Pods, Sporting Equipment, etc. Goods are generally referred to as products. Services satisfy needs and wants through the efforts of people or equipment. Ex: Vehicle repair, cable company, hair stylist, etc. © South-Western Educational Publishing
Economic Resources The means through which goods and services are produced. Also referred to as factors of production. 3 types… © South-Western Educational Publishing
Economic Resources Natural Resources Human Resources (Labor)The raw materials supplied by nature. Come from the earth, water, or air. Human Resources (Labor) The people who work to produce goods and services. Capital Resources The tools, equipment, supplies, and buildings that are used to supply goods and service. Capital is used to start, operate, or expand a business. Money is a type of Capital. © South-Western Educational Publishing
Economic Decision MakingThe process of deciding among several alternative wants the one that you most desire. © South-Western Educational Publishing
The Decision-Making ProcessGOOD DECISION 6. Review Your Decision 5. Act on Your Choice 4. Choose One 3. Evaluate Choices 2. Identify Choices 1. Define Problem PROBLEM © South-Western Educational Publishing
LESSON 1.3 HEALTHY ECONOMIES4/23/2017 LESSON 1.3 HEALTHY ECONOMIES Discuss three measurements of an economy's health Name and describe the four phases of a business cycle
Economic MeasurementsGross domestic product (GDP) The total dollar value of all goods and services produced in a country in one year. Includes three major categories What consumer spend for food, clothing, and housing. What businesses spend for buildings, equipment, and supplies. What government agencies spend to pay employees and buy supplies. © South-Western Educational Publishing
Gross Domestic ProductBase year – prices in any year are compared with this year. Constant Dollar (real GDP) – dollar amount when the effect of price increases is taken out. GDP Per Capita – the total GDP divided by the total population. © South-Western Educational Publishing
Economic MeasurementsLabor productivity The number of item produced per worker. Productivity = Number of units produced (output) Number of hours worked (input) Ex: Productivity = 10,000 units = 125 80 hours Worker Productivity – the productivity of one worker. © South-Western Educational Publishing
Economic MeasurementsInflation A sustained increase in the general level of prices for goods and services. Deflation A sustained decrease in the general level of prices. © South-Western Educational Publishing
The Business Cycle Prosperity RecessionThe phase where most people who want to work are employed and businesses produce goods and services in record numbers. Recession A phase of the business cycle where demand for goods and services begins to decrease, production decreases, unemployment begins to increase, and GDP growth slows down. © South-Western Educational Publishing
The Business Cycle Depression RecoveryA phase of the business cycle marked by a prolonged period of unemployment, weak sales of goods and services, and business failures. Recovery The phase in which unemployment begins to decrease, demand for goods and services begins to increase, and GDP begins to rise again. © South-Western Educational Publishing
LESSON 1.4 PARTICIPATE IN AN ECONOMY4/23/2017 LESSON 1.4 PARTICIPATE IN AN ECONOMY Define three economic roles performed by people in an economy Discuss standard of living and quality of life
Economic Roles Consumer Worker Citizen© South-Western Educational Publishing
Demand and Supply Demand is the relationship between the amount of a good or service that consumers are willing and able to buy and the price of the good or service. Supply is the relationship between the amount of a good or service that businesses are willing and able to provide and the price of the good or service. © South-Western Educational Publishing
Your Economic Well-BeingStandard of living refers to the way you live as measured by the kind and quantity of goods and services you can afford. Quality of life is the satisfaction and enjoyment that you get from your life. © South-Western Educational Publishing
Chapter 1 Economic Decisions & Systems
Chapter 3 - Economic Environment of Business
2 Our Global Economy 2-1 Economics and Decision Making
Economic Measurements How GDP, GDP per capita, and labor productivity measure economic performance.
Understand the role of business in the global economy.
1. THURSDAY JANUARY 26, 2012 Draw the five column chart below
THE BUSINESS OF FASHION 3.02 Explain the economics of fashion.
CHAPTER 4: GLOBAL ECONOMICS
Free Enterprise System Free Enterprise System In Introduction to Economics Philosophy that our nation’s founders believe that individuals should have the.
Economic Measurements Chapter 4
Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE1 CHAPTER Satisfying Needs and Wants Economic Choices Economic.
1 Economic Decisions and Systems 1-1 Satisfying Needs and Wants
Unit 1. Needs are essential Everyone Needs – food & water – Clean air – Shelter In today's society other needs include: – Good education – Employment.
Introduction to Business
Chapter 3 political and economic analysis Section 3.1
© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 1 SLIDE Satisfying Needs and Wants Economic Choices.
Chapter 2 Measuring economic activity
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