1 Economic History Industrial Revolution in the US Industrial Revolution in the US Railroads Railroads Steel Steel Interchangeable Parts Interchangeable Parts Electric Motor Electric Motor Internal Combustion Engine Internal Combustion Engine Modern Business Organization Modern Business Organization Trust Trust Holding Company Holding Company Business Corporation Business Corporation Stock as means of ownership and control Stock as means of ownership and control

2 Economic Systems Capitalism Capitalism What is it? What is it? Ownership and Control Ownership and Control Means of production Means of production Socialism Socialism What is it? What is it? Ownership and Control Ownership and Control Means of production Means of production

3 History of Economics Classical -- Capitalist Smith Neoclassical -- Capitalist Marshall Marxian -- Socialist Marx Institutional -- Pragmatist Veblen Keynesian -- Activist Keynes Many and Varied Schools of Economic Thought

4 Feudalism – an economic system based on tradition – dominated the Western world from the 8 th to the 15 th century. Mercantilism – an economic system in which the government doles out the rights to undertake economic activities. Industrial Revolution – technology and machines rapidly modernized industrial production. Capitalism Economic Systems

5 Firms Producers Households Consumers Goods Factors Government International Trade ExportsImports Main Elements in Economy A Circular Flow Model Land, Labor, Capital Local, State, National

6 Economic Thinking Alternatives Cost and Production Economic cost – Alternatives foregone Opportunity Cost Sunk Cost Utility and Consumption Usefulness Satisfaction Functional Conspicuous

7 Some Tools, Concepts & Language Demand A human want, need or desire Utility Price Supply The existence of of good or service Cost Price