EQ: How did the IR spark the rise of capitalism and what are the main characteristics of that economic system?

What is Capitalism? The underlying theme of capitalism is the use of wealth to create more wealth. In the case of a single owner of an industrial enterprise (such as a factory), the system reveals a characteristic distinction. All the profits go to one man, though many others share the work. Full-scale capitalism results in an inevitable divide between employer and employed, or capital and labor.

Capitalism Capitalism – economic system in which production, distribution, and exchange of wealth is privately owned with the goal of making profit in a market economy. Competition - rivalry in supplying or acquiring an economic service or good Crash course! http://www.youtube.com/watch?v=B3u4EFTwprM (stop at 7:50)

Market Economy market economy - an economy in which decisions regarding investment , production and distribution are based on supply and demand prices of goods and services are determined in a free price system **The great thing about the free market system is that prices and quantities tend to move toward equilibrium and, for the most part, keep the market stable.

Supply and Demand supply and demand is an economic model of price determination in a market. in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers will equal the quantity supplied by producers (equilibrium)

Laws of Supply and Demand If demand increases and supply remains unchanged, a shortage occurs, leading to a higher equilibrium price. If demand decreases and supply remains unchanged, a surplus occurs, leading to a lower equilibrium price. If demand remains unchanged and supply increases, a surplus occurs, leading to a lower equilibrium price. If demand remains unchanged and supply decreases, a shortage occurs, leading to a higher equilibrium price.

It has been a very snowy season and the demand for boots has not changed and the supply has increased. What will happen to the market and why?

2. The Beavers have had a great season and demand for jerseys has increased and the supply has not changed. What will happen in the market and why?

3. The demand for strawberries has not changed and the supply has decreased because of a frost. What will happen in the market and why?

4. Demand for popsicles goes down in the winter and supply does not change. What will happen in the market and why?

What pattern can you see? Surplus = lower price Shortage = higher price

EQ: How did the economic conflict created by the rise of capitalism affect society?

Laissez-Faire Economics (you remember that!) In the early 1800s the middle-class owners of railroads, factories, and mines began supporting laissez-faire. They believed that freedom from government controls would mean a growing economy with material progress for all people. Remember him?!

Low Wages and Unhappy People Profit making without profit sharing – seed of discontent planted among lower class (low wages) because factory owner were so greedy