Economics The Absolute Basics

Economics The study of how we divide our finite resources How we decide who gets what How do you get what you want? How do people in America get what they want?

Scarcity The condition of having unlimited wants but limited resources There isn’t enough stuff to go around Factors of Production Land Capital Tools, Equipment, Machinery, ETC Labor Entrepreneurs People who start businesses Can everyone in the world have as much oil as they want? Can everyone live in a Manhattan Sky rise Apartment?

Market Economy This is how Americans do it Also known as a free market Also known as capitalism Also known as Laissez-faire Decisions regarding investment, production, and distribution are based on market determined supply and demand, and prices of goods and services are determined in a free price system.

Market Economy Consider this You are a farmer and grow potatoes Other people need/want potatoes How do you decide who gets those potatoes? You can’t keep them all yourself Do you sell them? How much do you sell them for? As much as you can right? The price you will be able to charge is based on supply and demand

Supply and Demand

Command Economy Government Makes Economic Decisions Government Dictates the price of your potatoes Government tells you to grow corn next year instead of potatoes Communism

Communism Karl Marx came up with modern communism in his book Das Kapital Wrote that the poor should overthrow the government and take everyone’s stuff and pool it all together and then give it back out based on who needs it the most This is what happened in Russia during the Bolshevik Revolution Turns out the government isn’t very good at deciding what should be produced and who should get what and most communist markets failed Goal of communism is total equality among all citizens

Socialism Political and economic theory of social organization that advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole Communism Lite Government Owns the big stuff (oil, power plants, public transportation, etc) Government owns the land and whatever comes out of it (minus crops you grow) Goal of Socialism is to make everyone equal

Fascism Fascism is REALLY defined as a government that CONTROLS major corporations. Fascist governments do NOT "own" anything on paper. Socialism made to look like capitalism Goal of Fascism is to make the country/nation better

Bureaucratism A bureaucracy is an organization/Government made up of many departments and divisions that are administered by lots of people. If you've ever had to deal with health insurance or financial aid, you're familiar with the dark side of bureaucracy. Bureaucracy has come to mean an organization or government that is chin-deep in red tape and unnecessary procedures. When dealing with a bureaucracy, expect to fill out lots of forms and wait

Economics Explained Through Cows