Economics

Vocabulary Economy- A system for producing, and distributing goods and services to fulfill peoples wants (needs)

Vocabulary Capitalism - Free Enterprise or Free Market A type of economic system where the individual decides how goods and services will be produced and distributed Little to no government control of the economy

Vocabulary Socialism- A type of economic system where the government controls the major industries in a country (electric companies, oil, health care) The government decides how these goods and services will be produced and distributed. Some private ownership is allowed.

Vocabulary Communism- The government owns and controls all the production of goods and services There is no private ownership, everything is owned collectively by the people and the government decides who gets what and who can use what. Cuban Flag

Vocabulary Anything that is accepted as payment for goods and services Money- Anything that is accepted as payment for goods and services

Vocabulary Supply- The amount of a product made and sold in an economy at a certain price

Vocabulary Demand- Amount of people who want to buy a good or service at a certain price

Vocabulary Securities, stocks and shares- Ownership in a business or corporation

Vocabulary Buyer- A person who is willing to buy goods at a certain price

Vocabulary Seller- A person willing to sell a good or service at a certain price

Vocabulary Goods- Physical products that can be bought or sold Examples-- food, clothes, car

Vocabulary Services- Work that you will pay another person to do for you Examples--fix your car, go to a doctor, take care of your yard

Vocabulary Invest- To place your money into business, the stock market or other areas of the economy where you hope your money will make a profit

Vocabulary Budget- A plan for how you will spend and save money

Buyer’s cost - Seller’s cost = Profit Vocabulary Profits- The money you have left over after you subtract what it cost you to make something from what you were able to sell it for Buyer’s cost - Seller’s cost = Profit

What is an economy? An economy is a system for producing, and distributing goods and services to fulfill peoples wants (needs). You must have human wants in order to have an economy. Everyone wants something.

Human Wants? 2 types of wants that an economy helps to provide: Physical- food, water, oxygen, shelter, clothing Items that keep you alive. Emotional- love, feel good about yourself, happy.

Factors of Production The resources that produce the goods and services that satisfy people’s wants.

Factors of Production Land- Soil, minerals, water, animals, plants that grow on the Earth Basically, it is all of the Earth’s natural resources.

Factors of Production Labor - The time and energy it takes people to produce goods and services

Factors of Production Capital- Is anything that can be saved and used to produce other goods and services Examples- tools, machinery, or money

Test Yourself An ______________ is a system, in which goods and services are produced, and distributed to satisfy peoples’ wants. 2. Name the three (3) factors of production. 3. The three factors of production are combined together to make _____________ and ______________ to satisfy people’s wants.

Test Yourself An ECONOMY is a system, in which goods and services are produced, and distributed to satisfy peoples’ wants. 2. Name the three (3) factors of production. LAND, LABOR AND CAPITAL 3. The three factors of production are combined together to make GOODS and SERVICES to satisfy people’s wants.

Types of Economies Traditional Command Socialism Communism Market Capitalism Mixed

Types of Economies Traditional An economic system based on traditions and customs Most traditional economies are found in less developed countries of the world.

Types of Economies Command The government or central authority decides how the factors of production will be used Many command economies are found in dictatorships.

Command Economy This theory was started by Karl Marx and Friedrich Engel and includes: Communism All factors are owned by the government 2. Socialism Wealth should be distributed equally Karl Marx 

Types of Economies 3. Market In this type of economy private individuals decide how the factors of production are used, and how goods and services are produced and distributed. There is little or no government control of the economy. It is based on competition for profits.

Types of Economies 4. Mixed A combination of different types of economies Examples- Capitalism and Socialism

Test Yourself 1. ___ One of the two creators of communism A. Adam Smith B. Traditional 2 . ___ This type of economy has little or no private C. Karl Marx ownership of property, and the factors of production D. Communism are owned collectively. E. Social ism F. Capitalism 3. ___ How the factors of production are used in this type of economy are based on customs and traditions 4. ___ Author of The Wealth of Nations. 5. ___ Type of economy where the government controls the major industries in the country; and provides many services for the people, but this comes with very high taxes. 6. ____In this type of economy the individual controls the factors of production and decides how they will be used. 7. Why is America considered a mixed economy?

Test Yourself 1. C One of the two creators of communism A. Adam Smith B. Traditional 2 . D This type of economy has little or no private C. Karl Marx ownership of property, and the factors of production D. Communism are owned collectively. E. Social ism F. Capitalism 3. B How the factors of production are used in this type of economy are based on customs and traditions 4. A Author of The Wealth of Nations. 5. E Type of economy where the government controls the major industries in the country; and provides many services for the people, but this comes with very high taxes. 6. F In this type of economy the individual controls the factors of production and decides how they will be used. 7. Why is America considered a mixed economy? ALTHOUGH WE ARE PRIMARILY A MARKET (CAPITALISM) ECONOMY, WE HAVE SOME SOCIALISM IN THE FORM OF WELFARE AND SOME OTHER PUBLIC SERVICES.