The Industrial Revolution Economics
Describes how people meet their needs
Economics People have unlimited wants – things that they would like to have or to do These wants can never be fully satisfied
Economics Limited Resources – we only have so much time, energy, and resources to satisfy our needs and wants
Economics Three Economic Questions 1. What should be produced? 2. How should it be produced? 3. Who should get it?
Free Enterprise System Economic Freedom – the freedom to make their own choices in deciding what to buy, where to work, and what to make
Free Enterprise System People have the right to own property – such as possessions, homes, factories, farms, businesses – and to use their property as they see fit
Free Enterprise System People invest money or time to produce and sell goods and services in hopes to make a profit
Free Enterprise System Different producers often make the same goods or promote the same services
Free Enterprise System Gives consumers a choice in the type of goods available and how much they want to pay Forces producers to attract consumers by Improving quality Reducing prices
Free Enterprise System Government interference is limited Laissez-faire: “hands off” government The three basic economic questions are answered by the producers and consumers
Adam Smith Scottish professor Wrote The Wealth of Nations, 1776 First to explain how the free enterprise system works and the law of supply and demand “Invisible Hand” Guides individual actions so that they actually work for the common good
The Law of Supply and Demand Supply – how much of a good producers make available Demand – how much of a product consumers are willing to buy
The Interaction of Supply and Demand PRICES Low Demand/ Large Supply High Demand/ Short Supply PRICES
Free Enterprise System Flourished in Britain Played an important role in the Industrial Revolution Allowed investors and business owners to put their resources where they had the greatest benefit for the economy