Economics

What is Economics? Economics: the branch of social science that deals with the production and distribution and consumption of goods and services and their management

What questions do economist ask? What to produce? How to produce? For whom to produce?

What questions do economist ask? What to produce? How to produce? For whom to produce?

Scarcity Scarcity: condition where human wants are greater than the available supply. Time Goods Labor Capital Resources  Land & oil

Price What happens to price when items are scarce?

Production the making of goods available for use – Resources are turned into goods & services Resources – Natural resources – Labor – capital

distribution the act or process of distributing the marketing of goods How does the consumer get the goods or services? – Movement – Who decides?

consumption the act or process of consuming the amount consumed Satisfying our needs and wants by choosing goods & services – Consumer – Opportunity Cost: The best alternative sacrificed for a chosen alternative. Job vs. college

4 Types of Markets Economic Markets  Traditional  Command  Mixed  Free (market economy)

Traditional Economy Economic System that answers economic questions the way they have always been answered – Primitive tribe – Ainu in Japan – Native Brazilians (rain forest) – Amish

Traditional Economy Strengths Minimizes problems within society Weaknesses – Restricts individuals – Lacks advancements – Lacks new technology – Lacks economic growth

Market Economy Economic is a system based on private ownership, free trade, competition – Price is determined by supply & demand – Also known as Free Market Capitalism Example: United States

Market Economy Strengths – Freedom Buy & sell Entrepreneurship Advancements – technology

Command Economy Is a system in which the central government makes all economic decisions. – Government answers these questions What good to produce? How much goods to produce? What price will be charged? – Examples: North Korea & Cuba

Command Economy Owns & controls most businesses People do not have a say Regulate the market – Control Production & Distribution of goods & services

Mixed Market An economy that uses elements of both the command & market economic systems – Example is China Includes – Government purchases – Employment – Taxation – Redistribution – regulation

Market Economhy