ECONOMIES OF THE WORLD! … and the questions they each have to answer. Intro to Economics

SS6E5 The student will analyze different economic systems. a. Compare how traditional, command, and market, economies answer the economic questions of 1 - what to produce 2 - how to produce, and 3 - for whom to produce.

Question one! What should we produce? –Food? –Clothing? –Shelter? –Entertainment items/services? –Healthcare? –Education?

Question two! How do we produce it? –By hand? –In factories? –Small businesses? –Big businesses? –Do adults make the products? –Do children make the products?

Question three! Who are we producing it for? –Everyone? –Only the rich people? –Only the poor people? –Only for certain groups?

Traditional Economy What should we produce? –The basics! The most basic things necessary to live. Question one!

Traditional Economy How do we produce it? –Mostly by hand or using basic tools. Question two!

Traditional Economy Who are we producing it for? –Ourselves, our families, or to barter if we have too much Question three!

Market Economy What should we produce? –Whatever people will buy. Question one!

Market Economy How do we produce it? –Whatever way is cheapest! Question two!

Market Economy Who are we producing it for? –Whoever will buy it –If no one will buy it, we won’t produce it (supply & demand) Question three!

Command Economy What should we produce? –What the government thinks people will need Question one!

Command Economy How do we produce it? –By assigning jobs to the citizens –By using whatever capital resources available (including older factories and machines) Question two!

Command Economy Who are we producing it for? –We are producing it for every citizen, so everyone can have an equal amount Question three!

What is the difference between commercial and subsistence farming? Commercial Farming Growing enough food to feed large populations. *Think: Commercials on TV” sell to larg e amounts of people.* Subsistence Farming Survival Farming; enough for themselves or their families.

Entrepreneur The person responsible for bringing the human, capital, and natural resources together to start a business. Human Resources (Capital): Workers with knowledge, skills, and experience to make goods and provide services. (Examples: Teachers, Cashiers ) Capital Resources: Machines, factories, supplies (Examples: cash register, oven) Natural Resources: Raw materials to make goods-found in nature, such as: land, water, forests, minerals, soil. (Example: tree, fruit)

Public vs. Private Businesses Public Businesses owned by the government. Examples: Court houses, schools, post office, fire stations, police stations. Private Privately owned businesses. Entrepreneurs NOT government operated. Examples: retail stores, grocery stores (Wal-Mart, Target, Publix)

Economics Goods: Products(footballs, make-up, iPods, computers) Services: An action performed for money (example- doctor, hairdresser) Consumer: Person who buys and uses goods and services. Producer: Person who makes or provides services.

Specialization vs. Diversification Specialization Relying on only one crop or product Pros – can make things faster, cheaper, and usually better Cons – If something happens to that one product you could go out of business Diversification Relying on more than one crop or product Pros – there are more choices, Cons – Quality may be lacking, can be more expensive