1. 1-3

2.  Identify the three economic questions  Differentiate among the main types of economic systems  Describe the economic system of the United States

3.  All nations face scarcity  They have citizens with basic needs and unlimited wants  The countries must decide how the resources will be used to meet the needs  Answer 3 Questions 1. What goods and services will be produced? 2. How will the goods and services be produced? 3. What needs and wants will be satisfied with the goods and services produced?

4.  How these questions are answered will indicated what type of economic system that country has

5.  Nations have different natural resources  Rich soil with regular rain  Desert climates or long, cold winters  Where to focus  Manufacturing  Agriculture  Skilled engineers

6.  Each country must decide how it will use its resources to produce the goods and services it needs  Use: skilled or unskilled labor, own or other countries resources

7.  Decide what needs and wants are most important  Invest in capital goods (buildings, machines)  Produce consumer goods  Produce goods and services mainly for the govt.  Respond to people with the most money  US: lots of goods and services, amount of money depends on education, ability, and how you decided to use what you earn

8.  Economic System: a nations plan for answering the 3 economic questions  Based on how much the government is involved in the marketplace  Several kinds of economic systems, based on 3 main types

9.  Resources owned and controlled by government  Government decides  How goods will be distributed and shared  How much of the resources will be used to produce consumer goods and services (food, vehicles, houses)  How much capital goods (machinery, equipment, factories)

10.  Government may decided  Build a 1 st class military  Build a world-class education system  Spend money on research and technology  Build houses for the poor  Assign people to specific schools and even careers  Personal economic freedom is limited in command economies

11.  Resources are owned and controlled by the people of the country  Questions are answered by individuals through buying and selling of goods and services  No one directs a consumer to make a purchase or tells a business what to produce  Decisions are made on self-interest

12.  Goods and services are produced the way they have always been  Used in countries that are less developed  Children are taught from ancestors  Consume most of what they produce or trade/sell with people who live close by.  Centered on meeting basic needs

13.  Combines elements of command and market economies

14.  The former Soviet Union operated under a command economic system called communism  Government-led plans to direct resources toward economic growth  Limited choice and supply of consumer goods  Difficult to find products as bread or a hammer  Now the economy has changed over to mixed

15.  1.3 Billion Chinese live under a different communist government  Government controls most of the resources and decisions  As traditionalist economies develop they are adopting a mixed economy  Government decides how the resources will be used

16.  Market economy  Another name for the U.S. economic system is Capitalism  Private ownership of resources by individuals, rather than by government  Individuals and owners are free to decide what to produce or consume  Free enterprise or private enterprise

17.  Based on 4 principles  Private property  Freedom of choice  Profit  Competition

18.  You can own, use, or dispose of things of value  Own what you want as long as it doesn’t violate the law  If you invent something you can protect it from others

19.  Make decisions independently and must accept the consequences of those decisions  When to open a business, what to sell, how to operate the company  Where to shop, what to buy, what they spend  Only when individual decisions harm others will the government regulate freedom of choice

20.  Businesses invest resources and take risks for PROFIT!!!  The money left from sales after all of the costs of operating a business have been paid  The heart of the private enterprise system  The only reason for operating a business

21.  Rivalry among businesses to sell their goods and services  Consumers will choose the product or service that will best satisfy them  Forces businesses to improve products, keep costs low, provide customer service, and search for new ideas

22.  1-3 Worksheet