Chapter 2 Economic Resources & Systems Mrs. Rachubinski Entrepreneurship Mrs. Rachubinski Entrepreneurship

Chapter 2 Objectives / Define scarcity / List the four factors of production. / Identify the differences between market and command economies / Explain why most countries prefer a mixed economy. / Define scarcity / List the four factors of production. / Identify the differences between market and command economies / Explain why most countries prefer a mixed economy.

What is Economics? Chapter 2.1

Critical Thinking & Discussion / Did a store ever run out of an item you wanted to buy? / Did a store ever discontinue and item you liked? / What did you do? / Why was the store out of the item? / Did a store ever run out of an item you wanted to buy? / Did a store ever discontinue and item you liked? / What did you do? / Why was the store out of the item?

/ Scarcity / A shortage of resources. / Example: A community not having enough oil, doctors, or technology to satisfy wants and needs. / Scarcity / A shortage of resources. / Example: A community not having enough oil, doctors, or technology to satisfy wants and needs.

Factors of Production

/ Everything that is necessary to produce a society’s goods and services.

4 Factors of Production 1. Natural Resources 2. Labor Resources 3. Capital Resources 4. Entrepreneurial Resources 1. Natural Resources 2. Labor Resources 3. Capital Resources 4. Entrepreneurial Resources

1. Natural Resources / Raw materials found in nature. / Used to produce goods. / Examples: Trees -> Paper Fish -> harvested for food / Raw materials found in nature. / Used to produce goods. / Examples: Trees -> Paper Fish -> harvested for food

Natural Resources (continued) / Elements that can be combined to create goods. / Countries depend on their natural resources. / Elements that can be combined to create goods. / Countries depend on their natural resources.

2 Types of Natural Resources / Renewable / Can be reproduced / Ex: wheat, cattle / Nonrenewable / Limited / Ex: coal, iron, oil / Renewable / Can be reproduced / Ex: wheat, cattle / Nonrenewable / Limited / Ex: coal, iron, oil

2. Labor Resources / Knowledge, efforts, and skills people bring to their work. / Examples: teachers, coal miners, managers, farmers / Knowledge, efforts, and skills people bring to their work. / Examples: teachers, coal miners, managers, farmers

Labor Resources (continued) / Skilled or unskilled / Physical or intellectual / Labor Unions / Skilled or unskilled / Physical or intellectual / Labor Unions

3. Capital Resources / Things used to produce goods and services. / Examples: Buildings, materials, equipment, delivery trucks, supermarkets, cash registers, etc. / Things used to produce goods and services. / Examples: Buildings, materials, equipment, delivery trucks, supermarkets, cash registers, etc.

4. Entrepreneurial Resources / Meets the changing wants and needs of people. / Entrepreneurs recognize the need for new goods and services. / Improve resources / Meets the changing wants and needs of people. / Entrepreneurs recognize the need for new goods and services. / Improve resources

Review Key Questions / Socrative / Room: rachubinskiB124 / Socrative / Room: rachubinskiB124

TYPES OF ECONOMIC SYSTEMS Chapter 2.2

Economics / How society chooses to use resources: / produce and distribute goods and services. / How society chooses to use resources: / produce and distribute goods and services.

Business Contribution / Inventing products that use available resources

Economic System / ‘monitors’ resources / Goal: provide people with a minimum standard of living or quality of life / 2 types of economic systems: / Market Economy / Command Economy / ‘monitors’ resources / Goal: provide people with a minimum standard of living or quality of life / 2 types of economic systems: / Market Economy / Command Economy

Create a large ven diagram in your notes – half of a page in size. Label one side ‘Market Economy’, one side ‘Command Economy’, and Both in the middle.

Market Economy / Economic decisions are made in the marketplace

Market Economic System / Capitalism / Resources are privately owned / Own your house, land, business, etc. / Government control is minimal / In reference to the US, what does the government control? Record in notes / Capitalism / Resources are privately owned / Own your house, land, business, etc. / Government control is minimal / In reference to the US, what does the government control? Record in notes

Market Economy (continued) / The Profit Motive / Desire to make more money / Businesses constantly competing / Owners and producers reap most rewards / Fact: CEOs make 500 times avg workers / The Profit Motive / Desire to make more money / Businesses constantly competing / Owners and producers reap most rewards / Fact: CEOs make 500 times avg workers

Command Economy / Central authority makes key economic decisions.

Command Economy / Government owns major resources / Airlines and steel / Makes key economic decisions / Individuals may own some businesses / Government owns major resources / Airlines and steel / Makes key economic decisions / Individuals may own some businesses

Command Economy / Advantages / Disadvantages Brainstorm in your notes!

Mixed Economy / Combination of market and command economies / The government takes care of peoples needs, the marketplace takes care of peoples wants. / Combination of market and command economies / The government takes care of peoples needs, the marketplace takes care of peoples wants.

Review Questions / How does a market system decide what will be produced? / In a market system, what determines how many goods and services an individual can buy? / Some nations can product more goods with fewer workers than other countries that have more workers. How can this be true? / How does a market system decide what will be produced? / In a market system, what determines how many goods and services an individual can buy? / Some nations can product more goods with fewer workers than other countries that have more workers. How can this be true?

Background / World’s most populous nation / 1.3 Billion / Growing economy / Industry & Agriculture / Communist / World’s most populous nation / 1.3 Billion / Growing economy / Industry & Agriculture / Communist

Features of China / Rivers / Mountains / Country Boarders / 14 Countries (including Russia & India) / Rivers / Mountains / Country Boarders / 14 Countries (including Russia & India)

/ What influence might these features have on the Chinese economy?

/ "China should overtake the US to become the largest economy in the world by 2020, then be overtaken by India by 2050," Willem Buiter, chief economist at Citigroup predicted

Measuring Economic Progress / domestic saving/ investment / demographic prospects / health / education / quality of institutions and policies / A measure of trade openness / domestic saving/ investment / demographic prospects / health / education / quality of institutions and policies / A measure of trade openness

What are some ways to revitalize our economy? China / 40% of workforce is in the service industry / 49% manufacturing / Debt = $400 billion / Creditor nation US / 80% of workforce is in the service industry / 19% manufacturing / Debt = $13.75 trillion