THE BASICS OF ECONOMICS The factors of production A further understanding of the three basic economies What is the public good and what is the best way to achieve it Four key concepts of economics

WHAT ARE THE BASIC FACTORS OF PRODUCTION There are three components to production 1.Land Consists of all the materials found in the natural environment needed to produce goods including both renewable and nonrenewable resources

WHAT ARE THE BASIC FACTORS OF PRODUCTION There are three components to production 2.Labour –Consists of all the physical and mental effort needed to produce goods and services

WHAT ARE THE BASIC FACTORS OF PRODUCTION There are three components to production 3.Capital –Consists of money that people own or borrow, used to purchase equipment, tools and other resources to produce goods and services

THE ECONOMIC CONTIUNUM more government involvement less government involvement Planned EconomyMixed EconomyMarket Economy These are the three base economies, and one thing to understand is that all economies are to some extent mixed

THE PLANNED ECONOMY At the far left of the spectrum the government makes all decisions about how to solve scarcity Some characteristics –Resources are publicly owned –Government makes decisions on how to use resources –Individual consumers have little influence on economic decision making

THE MIXED ECONOMY video 3 Combines private ownership and government control, in these economies, the level of government involvement fluctuates depending on who is in power Some characteristics –Some resources are publicly owned and some are privately owned –Individuals and Government both make decisions about what to produce –Individual consumers and government influence economic decision making

THE MARKET ECONOMY At the right end of the spectrum the choices of individuals business owners and consumers solve scarcity Some characteristics –Resources are privately –Individual consumers make decision on how to use resources –Individual consumers drive economic decision making by choosing what to buy –VIDEO TWO: SS 9

WHAT IS THE PUBLIC GOOD In theory, what is in the best interests for society as a whole –Difficulty lies in the fact that intelligent and reasonable people can disagree about what that is in the best interests of the entire society

ONE OUTLOOK ON THE PUBLIC GOOD The perspective on the left believes that the public good is best served when the needs of the group and cooperation are emphasized in society

A DIFFERENT OUTLOOK ON THE PUBLIC GOOD The perspective on the right believes that the public good is best served when the needs of the individual and competition are emphasized in society

FOUR KEY CONCEPTS Consumers –Those who use and purchase products and services Producers –Those who create products and services

FOUR KEY CONCEPTS Supply –The products and services created by producers Demand –the wants and needs of consumers for products and services

WHAT ABOUT COMPETITION Competition –this is the rivalry among producers to sell products to consumers –there are various types of competition Monopoly –Happens when one producer controls all the supplies of a product or service