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LEARNING TARGET - I can explain the basic fundamentals / traits that define economics. Essential Questions: 1. What are the basic characteristics of economics? 2. What are resources and how do they play a role in economics? 3. What types of economic activities satisfy people’s wants or needs? 4. How do we determine the economic development of a country or region?

What are the basic characteristics of economics?

1. Economics – is the system that deals with the production, distribution, and use of wealth (goods and services) * there are 3 basic questions that control economics 1. What (and how many) goods and services will be produced? 2. How will these products be produced? 3. How will the products and wealth gained be distributed?

2. Economic systems – are the ways societies choose to answer the 3 questions (4 types) * traditional – goods and services are traded without exchanging money (called bartering) ** today – this is only done on small levels or in poor rural areas * market (aka – demand, free enterprise, capitalism) – the people control economics ** the government plays a small role (minor regulation) or no role (laissez faire) * command (aka – planned, centralized, communism)– the government controls economics ** communist philosophy – everything is owned by everyone (eliminates social classes) * mixed (aka – socialist)– there is a combination of market and command principles ** government controls some major parts of economics (like health care or utilities)

Quick quiz (review) What economic system is this? CAPITALISM

Quick quiz (review) What economic system is this? SOCIALISM

Quick quiz (review) What economic system is this? KARL MARX’S IDEA OF COMMUNISM

Quick quiz (review) What economic system is this? WHAT COMMUNISM TURNED OUT TO BE SO FAR!!

Where do you find Communism in the world today?

3. Economy – consists of the production and distribution of goods and services amongst a group of people * levels of an economy Local – Country Donuts regional (Jewel) national (Kohls) international (McDonalds)

4. Supply and Demand – are the two forces that control economics (prices of good / services) * supply is the amount of a product that is available for sale * demand is the desire for owning a product * formulas: ** supply > demand = price goes down ** supply < demand = price goes up

What are resources and how do they play a role in economics?

1. Resources – are anything that can be of use (that satisfies a want or need) * if it can’t be used – then it is waste (garbage, trash, junk) 2. Natural resources – are usable materials that occur within the earth (plants, animals, minerals, fossil fuels) * renewable – nature can constantly supply or replenish them (trees, animals, water, air, sun) * nonrenewable – nature cannot replenish the materials or it takes too long (minerals & fossil fuels) 3. Energy resources – are materials used to generate power for heating, electricity, or powering machines * fossil fuels – are formed from the remains of plants and animals (coal, oil, natural gas) * nuclear – energy is released by splitting uranium atoms (fission) * alternative – energy typically uses renewable sources (wind, solar, hydroelectric, tidal, geothermal) 4. Other resources: * human – provides labor (workforce – skilled & unskilled) paid or unpaid (slavery) * capital – money (which includes buildings and machinery)

5. Money - coins & paper currency are a representation of wealth that simplifies the exchange of goods & services * coins & paper currency get their value from the acceptance and trust people have in them ** this is why gold and silver are so valuable (people have always accepted them)

6. Resources are a major part of world trade ** imports – goods coming into a country (buying) ** exports – goods leaving a country (selling) ** balance of trade shows the relationship between imports and exports *** favorable – exports > imports *** unfavorable imports > exports 7. Control over resources has led to many wars

What types of economic activities satisfy people’s wants or needs?

1. Primary activities – involve the gathering of raw materials * agriculture – farming ** subsistence – growing or gathering enough food to meet your daily needs (survival) *** includes – hunting, fishing, gathering, and herding (nomadic) ** commercial – growing or gathering a surplus (abundance) of food to sell in the market *** includes – large farms, plantations, & ranches * other activities would include forestry (lumber), fishing, and mining 2. Secondary activities – add value to raw materials by turning them into finished products (manufacturing) * factories produce manufactured goods to sell in the market 3. Service activities – provide business or professional services * examples – doctors, lawyers, teachers, police, plumbers, etc.

How do we determine the economic development of a country or region?

1. Measuring development * Gross National Product (GNP) – measures the total value of all goods and services produced by a country ** includes any wealth generated outside the country (foreign) * Gross Domestic Product (GDP) – same as GNP except it only looks at wealth generated within the country * Per capita income – gives a value to each person in the country based on the overall wealth produced ** calculate by taking the GNP or GDP and divide it by the total population

2. Levels of development ** developing (poor) *** low GNP and per capita ( a lot of subsistance agriculture) *** low standards of living (housing, nutrition, sanitation, education, & technology) *** bad infrastructure (roads, railroads, airports, water supplies, electricity) *** unstable economy – very little diversity of primary, secondary, & tertiary activities - one crop economies only produce and sell a few major products *** poor health care - high death rates, low life expectancies, many diseases, malnutrition - lack of hospitals, doctors, medicine, and information ** developed (wealthy) – basically the opposite characteristics of developing countries

Final Thought (From the Donald) Modern economics is ultimately a game – so learn how to play it!

Hey! let’s watch Animal FarmAnimal Farm Symbolism Meaning