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Chapter 3 Louisiana’s Economy: Resources and Rewards

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0 Louisiana: The History of an American State
Chapter 3 Louisiana’s Economy: Resources and Rewards Study Presentation ©2005 Clairmont Press

1 Chapter 3 Louisiana’s Economy: Resources and Rewards
Section 1: Basic Economic Concepts Section 2: Louisiana’s Economic History Section 3: Louisiana’s Resources Section 4: Providing Louisiana’s Goods and Services

2 Section 1: Basic Economic Concepts
ESSENTIAL QUESTION: How do people satisfy their wants and needs in our economic system?

3 Section 1: Basic Economic Concepts
What words do I need to know? goods services consumer producer natural resources human resources capital resources scarcity

4 Section 1: Basic Economic Concepts
9. opportunity cost 10. supply 11. demand 12. profit 13. traditional economy 14. command economy 15. market economy

5 Wants and Needs goods: physical items – food, clothing, cars, housing, etc. services: activities people do for a fee producer: person or business – makes goods or provides a service

6 Resources and Scarcity
natural resource: gift of nature – part of the natural environment, - water, trees, minerals human resources: people – those who produce goods & provide services capital resources: money & property – used to produce goods and services scarcity: available resources – demand greater than supply

7 Making Choices Scarcity vs. producers & consumers
Unlimited needs vs. wants Limited resources vs. limited amounts of goods & services Basis of an economic system choosing how to use resources Those making choices in United States individuals, businesses, & communities

8 Costs and Benefits Opportunity benefit
Choices (getting a job vs. going to college) Immediate salary vs. getting an education Opportunity cost – cost of choice not taken Other choices of opportunity benefits & costs Using resources or using time Value of non-chosen alternative

9 Trade-Offs Either/or choice: not always the best May combine parts of choices as trade-off Trade-off choices to get wants & needs

10 Supply and Demand supply: quantity of a good or service offered for sale demand: quantity of a good or service consumers are willing to buy Lower prices: consumers buy more, producers make less $ per item Higher prices: consumers buy less, producers make more $ per item profit: amount left after costs are subtracted from price (motivator for producers)

11 Basic Economic Questions
Four basic economic questions: 1) What do we produce? 2) How can it be produced? 3) How much will it cost to produce? 4) For whom will we produce?

12 Making the necessary decisions
What to Produce Making the necessary decisions Meeting needs & wants How to make the capital resource (money) Human resources Natural resources Finally, deciding what to produce

13 How to Produce Plan of action: Overall production schedules:
How to carry out plan Process of implementation Supplies needed Overall production schedules: When to start production When to end production

14 Items to consider for plan
How Much to Produce Items to consider for plan Time involved Resources needed Market demand for product (s) and/or service (s) Decisions affected by scarcity

15 For Whom to Produce Develop knowledge of consumers Study needs of consumers Consider supply & demand Analyze & plan for competitors Consider advertising

16 Economic Systems economist: one who studies the economy
Three basic kinds of economies Traditional Economy Command Economy Market Economy Economy may function as combination of all three

17 Traditional Economy Customs, habits, & beliefs determine and answer the four basic economic questions Continues in the way it has always been done

18 Command Economy The government … controls the economy
answers the four basic questions makes the decisions has power & authority negotiates input & output controls competition

19 Market Economy Individuals…
Answer the four basic economic questions based on supply & demand Also known as free enterprise Based on private ownership Freedom of choice Click here to return to Main Menu.

20 Section 2: Louisiana’s Economic History
ESSENTIAL QUESTION: What were Louisiana’s early economic systems?

21 Section 2: Louisiana’s Economic History
What words do I need to know? barter mercantilism smuggling indigo tobacco commerce

22 Louisiana’s Economic History
1st economic system: barter (trading goods & services without money) Then mercantilism: command economy controlled by the government Next, smuggling: illegal trade with colonies of other nations

23 Louisiana’s Economic History
Louisiana Purchase: end of colonial period end of earliest crops tobacco & indigo beginning of agricultural market New market: sugar cane & cotton New Orleans: became a major port for North America 1801 described as “the grand mart of business, Alexandria of America”

24 Louisiana’s Economic History
Early years of statehood: a continuing agricultural economy 20 years before Civil War: a booming economy End of Civil War till after WWII: a struggling economy Growth and survival of war-developed industries

25 Louisiana’s Economic History
New equipment & machines brought by technology Human labor replaced by machines Many farms deserted by workers 1880 – 1920: most old growth trees cut or gone

26 Louisiana’s Economic History
Oil (another resource) Became valuable in early 20th century Economy base changed by new industry Agricultural economy changed due to WWII & demands for oil New economic direction: interdependent global economy 21st century: seeks diversity & less dependence on oil industry Click here to return to Main Menu.

27 Section 3: Louisiana’s Resources
ESSENTIAL QUESTION: What roles do natural resources, capital resources, and human resources play in the economy of Louisiana?

28 Section 3: Louisiana’s Resources
What words do I need to know? mineral resources nonrenewable lignite biological resources renewable pulpwood labor union

29 Natural Resources Economy supported by abundant natural resources
Examples: air, water, & rich soil 21st century: agricultural shift from small farms/plantations to huge agribusiness systems Fewer people on farms Amount of crops not decreased

30 Natural Resources State ranking: 2nd in sugar cane & sweet potatoes
Vital crops: rice, cotton, soybeans Soil & climate good for raising beef & dairy cattle (dairy farming diminished) Abundant water supply good for agriculture, industry, human use, transportation, & recreation

31 Mineral Resources Oil Natural Gas Salt Sulfur Lignite

32 Mineral Resources minerals: inorganic substances formed by Earth’s geological processes Important to Louisiana’s economy nonrenewable: not replaced by nature once extracted (taken) from the environment Mineral resources found in Louisiana oil (“black gold”), natural gas, salt, sulfur, lignite Construction resources in Louisiana sand, gravel, limestone

33 Oil Oil for today’s energy created by decayed plants from millions of years ago 10% of US oil reserves in Louisiana Louisiana: one of top oil-producing states in United States 1901 – 1st oil well in Louisiana 1947 – 1st platform in Gulf of Mexico More oil deposits beneath Gulf of Mexico

34 Natural Gas Larger deposits than oil ¼ of the nation’s supply
1st burned as waste 1917: “carbon black” developed used in making tires, ink, & more Important energy for homes & industry

35 Salt Needed for human & animal survival
Used by Native Americans in trade A form of money, later Relied on by the Confederacy during the Civil War Used in chemicals & other products polyvinyl chloride plastic PVC pipe for plumbing

36 Sulfur Major ingredient in:
matches, gunpowder, medicine, plastic & paper 1869 – “richest 50 acres in the world” town of Sulphur in Calcasieu Parish Decrease in value foreign import changed importance unprofitable to mine in Louisiana

37 Lignite Soft, brownish-black coal Burns poorly Mined since 1970s Found mostly in DeSoto Parish Used for electric power station near Mansfield

38 Biological Resources Biological resources
Common term: plants & animals Scientific term: flora & fauna renewable: replenish over time Main divisions: Forests Wildlife Fish

39 Forests 50% of Louisiana in forests 2nd largest income producer 90% pine trees 75% trees cut for pulpwood Large trees cut for sawtimber

40 Forests Hardwood sawtimber used for furniture & flooring Paper mills, lumber mills, & plywood plants Christmas tree farms started by the Office of Forestry in the LA Dept. of Agriculture

41 Wildlife Variety of wildlife Economic resources Hunting regulations
History of trapping & hunting tradition Economic resources Fur pelts: Once sold more than a million pelts annually Hunting regulations State Department of Wildlife and Fisheries

42 Wildlife Hunting Timber cutting Source of food Recreation
Millions of dollars for state’s economy Timber cutting Reduced forest land Forest animals decreased Increase in recent years

43 Wildlife White-tailed dear Black bear Wild turkey
Population has increased Black bear Largest wild animal in Louisiana Endangered: not legal to hunt Wild turkey Classified as a game bird Efforts have been made to increase its numbers

44 Wildlife Dove Quail Migratory waterfowl Alligators
1963: placed on the federal protected species list 1981: hunting under strict rules Millions of dollars in hides & meat

45 Freshwater bream, bass, perch, catfish Game fish:
Fish (Recreation) Freshwater bream, bass, perch, catfish Game fish: trout, redfish, drum, mackerel, blue marlin, amberjack, grouper, & tarpon (illegal to sell commercially)

46 Fish (Commercial) Crawfish raised on crawfish farms Catfish sold: freshwater & farms Commercial fishing: tuna, sea trout, red snapper

47 Capital Resources Human-made products used to produce goods or services Examples: rice mills, sugar refineries, oil refineries, cotton gins, & meat-packing plants Others include: transportation facilities – bridges, highways, & airports

48 Human Resources People who supply the labor Physical or mental
Paid for goods or services Requirements new skills & specialization education & training Labor unions – workers’ organization to protect workers’ rights 1976 – right-to-work law passed – workers could not be forced to join a union Click here to return to Main Menu.

49 Section 4: Providing Louisiana’s Goods and Services
ESSENTIAL QUESTION: What is Louisiana’s place in the global economy?

50 Section 4: Providing Louisiana’s Goods and Services
What words do I need to know? 1. private goods & services 2. public goods & services 3. interdependent 4. Superport 5. tariff 6. economic indicators 7. gross domestic product (GNP) 8. consumer price index 9. inflation 10. unemployment rate

51 Providing Louisiana’s Goods and Services
free market: private goods & services Limited services & benefits to the owners Provided by the government: public goods & services Usually available to everyone highways, police, education, libraries

52 Manufacturing Louisiana-made goods include…
Ships, trucks, electrical equipment, glass products, automobile batteries, & mobile homes Chemicals industry Ranks 2nd in USA Petrochemicals (chemicals made from petroleum) More than 100 chemical plants in LA Fertilizers & plastics

53 Manufacturing Billions of gallons of gas from petroleum refineries each year Shipbuilding transport ships & merchant vessels Coast Guard cutters, barges, tugs, supply boats, fishing vessels, & pleasure craft

54 Aerospace and Aviation
Louisiana workers part of the United States space program Space shuttles assembled in New Orleans Lake Charles aircraft assembly for military use

55 Biotechnology Combines biological research with engineering Pennington Biomedical Center leader in research

56 Service Industries Adds billions of dollars to the economy Tourism
sightseeing eating shopping fishing & hunting Mardi Gras Movie-making 1908 – 1st film made in Louisiana 1917 – 1st Tarzan film made More recent – “Steel Magnolias”

57 Economic Institutions
Joint effort to produce & sell goods and services Groups known as economic institutions Include Businesses large and small Corporations: owned by investors, banks, & labor unions Banks important: allow producers & consumers to trade, save, & invest

58 Louisiana in the U.S. and Global Economies
1st economic systems: simple barter economies Today’s systems interdependent overlap producers & consumers rely on each other Louisiana’s offshore port: Superport

59 Trade Policies North American Free Trade Agreement (NAFTA) changes trade policies & agreements Trade restrictions removed Foreign countries offer cheap labor abroad Companies moving abroad Tariffs lessened Imported goods & low prices hurting Louisiana

60 Gross domestic product Consumer price index Inflation
Measuring the Economy Economic indicators Gross domestic product Consumer price index Inflation Unemployment rates Click here to return to Main Menu.

61 Click here to return to Main Menu.

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