Social Studies/Economics

Economics: The study of uses of scarce (Limited) resources to satisfy unlimited human wants.

Renewability With the person sitting beside you, see if you can think of any resources that are truly unlimited in quantity.

Terminology/Vocabulary  Capitalism  Communism  Traditional Economy  Command Economy  Market Economy  Mixed Economy

Economic Goals Different Societies answer the three economic questions based on the importance they attach to various economic goals. Economic Goals: Economic Efficiency Economic Freedom Economic Security and Predictability

● All nations must answer the question of scarcity. ● All nations and societies must allocate their resources in order to meet their perceived needs.

● The cost of the choices we make regarding resources is known as opportunity cost.

● When making these choices and dealing with scarcity, resource allocation and opportunity cost nations are answering what we have previously referred to as the three basic economic questions.

● What to produce? ● How to produce? ● For whom to produce? (or Who Consumes Goods and Services?

Safety Net a set of government programs to protect people in unfavorable economic conditions.

Adam Smith Adam Smith ( ) is considered the father of modern economic theory Capitalism: an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state.

Karl Marx Karl Marx ( ) Co-author The Communist Manifesto Communism political and economic theory advocating class war and leading to a society in which all property is publicly owned and each person works and is paid according to their abilities and needs.

Traditional Economies  Traditional economies are found in rural, non- developed countries  Some parts of Asia, Africa, South America and the Middle East have traditional economies  Customs govern the economic decisions that are made  Technology is not used in traditional economies.

Traditional Economies  Farming, hunting and gathering are done the same way as the generation before  Economic activities are usually centered toward the family or ethnic unit  Men and Women are given different economic roles and tasks

Command Economies (Communism)  The government or other central authority makes decisions and determines how resources will be used  Change can occur relatively easily  There is little individual freedom  There is no competition  Businesses are not run to create a profit

Command Economies (Communism)  Consumers have few choices in the market place  Factories are concerned with quotas  Shortages are common because of poorly run factories and farms  The government dictates the job in which you work

Command Economies (Communism)  The government sets the prices of goods and services  Examples of command economies: Cuba, North Korea and the People’s Republic of China (although this is changing)

Market Economies (Capitalism)  Resources are owned and controlled by individuals  Economic decisions are made by individuals competing to earn profits  Individual freedom is considered very important  Economic decisions are made by the basic principals of supply and demand  Profit is the motive for increasing work rather than quotas

Market Economies (Capitalism)  Also called capitalist economies  There are many economic freedoms  There is competition among businesses  Competition determines price which increase the quality of the product

Mixed Economies  Government and individuals share the decision making process  Government guides and regulates production of goods and services offered  Individuals own means of production  Protects consumers and workers from unfair policies  Most effective economy for providing goods and services

Continuum of Economic Systems Command Economy Communism On the far left Market Economy Capitalism On the far right Socialism Left of center but right of communism

Four Types of Economies  Traditional Economies  Command Economies (Communism)  Market Economies (Capitalism)  Mixed Economies Review