1. DO FIRST Glue the unit 8 calendar into your notebook
Using the vocabulary terms, read the 5 definitions and complete the nine practice problems by yourself to assess your understanding of the vocab terms.

2. Economics
Economics is the study of how individuals, businesses, and nations make things, buy things, spend money and save money.
Term
Definition
Producer
A person or group that makes or provides a good or service.
Consumer
A person that buys or uses a good or service.
Goods
physical (tangible) objects that can satisfy people’s wants
Services
actions (intangibles) that one person performs for another to satisfy wants
Scarcity
Having “unlimited wants” (I want to drive across the United States) and “limited resources” (I only have $30 dollars for gas )

3. Economics
Economics is the study of how people meet their basic needs. All societies must answer 3 fundamental economic questions. How a society answers these three fundamental economic questions determines its type of economic system.
Economic Question 1
Economic Question 2
Economic Question 3
What should be produced?
How should it be produced?
Who gets what is produced?

4. A Traditional Economy is…
determined by custom and tradition. Generally people do what their ancestors did.
Examples:
Bangladesh
Burma
Malawi

5. Economic Decisions
Custom and Tradition determine what should be produced, how it should be produced and for whom.

6. Production
The production of goods is based on custom and time-honored methods.
New ideas are discouraged.
Change and growth proceed very slowly

7. Private Property
Often there is no private property: things are owned by the family or village in common

8. Trade
Goods and services are produced to meet the needs of the members of the family or tribe.
Since they are produced and consumed locally, there is very little trade with outsiders.

9. 2 Important Vocab Words
Subsistence Agriculture – land produces only enough crops to feed family or village.
Cottage Industries - goods made in the home. They help traditional societies meet needs of their family and the village.

10. Traditional Economy
Read the passage and complete the chart that answers the three questions.

11. Traditional Economy What to produce?
Production based on custom and time-honored methods

12. Traditional Economy How is it produced?
Children will do what their parents did
Resources/tools are primitive (basic)
Major jobs are:
Hunting
Farming
Herding cattle

13. Traditional Economy Who gets it?
Only enough is produced to meet the needs of the family or tribe
Everything is shared

14. A Free Enterprise is…
Determined by interactions between buyers and sellers
AKA: Capitalism
Examples:
They do not exist in the real world. Countries that are close to having a Free Enterprise are:
The United States
Japan
Germany

15. Private Property
People have a right to own private property (personal possessions, factories, farms, businesses) and to use this property as they see fit with limited governmental interference.

16. Free Enterprise
People are free to take part in any business, buy any product, or sell any legal product.
Businesses are also free to do anything they wish in order to attract customers (lower prices, advertise, etc.)

17. Profit Motive
The ability to make profits is what drives people to risk their money in starting new businesses.
Sellers want to make a profit

18. Supply and Demand
The interaction of supply and demand determines prices in a free market economy.
When demand is high, the price goes up. If the supply is high but demand is low, the price goes down.

19. Important Vocab Terms
Commercial Agriculture: crop production is intended for distribution to wholesalers and retailers, such as supermarkets and grocery stores. This makes production cheaper.
Commercial Industries: goods are manufactured in factories for sale throughout the country or overseas.

20. Free Enterprise Economy
Read the passage and complete the chart that answers the three questions.

21. Free Enterprise What to produce?
People are free to produce what they want
Based on profit motive (people want to make money)

22. Free Enterprise How is it produced?
Commercial Industries (goods are manufactured in factories, large scale)
Commercial Agriculture (farmers grow food to feed many ppl and sell it for $$$)
Commercial = large scale & $$$$$

23. Free Enterprise Who gets it? You can buy anything you can afford
Price is determined by supply (how much) and demand (how badly ppl want it)
If demand is high = price goes up
If supply is high but demand is low = price goes down

24. Role of Government Limited gov’t interference Gov’t acts as:
Umpire (makes sure business play fair)
Enforces common rules
Maintains monetary ($$) system

25. Guided Practice – Short Answer
Annotate the question
How does a Free Enterprise economy determine what is produced, how is it produced, and who gets it? Contrast a free market economy with a traditional economy, specifically mentioning subsistence agriculture and commercial agriculture.
Brainstorm with elbow partner
Write down notes in 1st set of lines
Expectations:
Quiet voices

26. A Command (Communist) Economy is…
Where all decisions made by the GOVERNMENT
Examples:
Vietnam
Cuba
North Korea
China

27. Command = Communism Developed in 1800’s by Karl Marx
Good in theory, bad in practice
Equality for everyone
What can go wrong with everyone working hard and sharing all resources equally?

28. Role of Government
All major decisions on production, distribution and the use of resources are made by government planners

29. Private Property
Private property ownership is abolished and replaced by national ownership of all land, factories, farms and major resources

30. Cooperation
Communism is based on cooperation, in which all workers should labor together and share equally.
The economy is supposed to be run for the benefit of all members.

31. Major Goal
The goal is to achieve a classless society – equality among all workers.

32. Command Economy
Read the passage and complete the chart that answers the three questions.

33. Command Economy What to produce? Determined by the government
Government leaders develop “national plans” (5 year periods) that specify which goods a factory will make

34. Command Economy How is it produced? Government decides
Cooperation – all workers labor together and share equally
Large Scale Industry
Large Scale Agriculture
“Workers of the world, unite!”
- From The Communist Manifesto

35. Command Economy Who decides who gets is?
Government determines who gets it (equality is key)
Goal is to achieve a classless society (equality for everyone)
No private property, replaced by national ownership of everything

36. A Socialist (Mixed) Economy is…
Where most important business is owned by the government
Most countries have elements of both free enterprise and command, and are somewhere in the middle of the spectrum
Examples:
Sweden
Norway

37. Role of Government
Government should use its power to bring an end to poverty by taking control of the major resources of the nation (railroads, airlines, radio stations) and by providing public service.

38. Economic Decisions
Many decisions about production, distribution and the use of resources are made by the government. Other decisions are made privately.

39. Private Property
Major industries are owned by the government. Other property is held privately.

40. Major Goal
Socialism seeks a fairer distribution of income among all members of society. People’s basic needs (health care, transportation, education, housing) are met for free or at very low cost.

41. Socialist Economy
Read the passage and complete the chart that answers the three questions.

42. Socialist Economy What to produce?
Major industries (railroads, airlines, hospitals, banks) owned by gov’t
Everything else owned by people (small businesses/shops, etc…)

43. Socialist Economy How is it produced? Gov’t decides on big industries
People decide everything else

44. Socialist Economy Who gets it? Fair distribution of goods and income
Gov’t goal is to end poverty