Economics

What is economics The study of how society chooses to use resources, to produce and distribute goods and services for peoples consumption Isms

Factors of production All components (resources)necessary to produce society's goods and services Management of resources is the biggest problem Resource shortage is scarcity

Natural resources Raw materials found in nature Becomes a factor of production when used to produce goods The economy of many countries are based upon its natural resources Two types: Renewable and Non-Rewable

Human resources Knowledge, efforts and skills people bring to their work Also known as labor

Capital resources Things used to produce goods and services

Entrepreneurial resources The initiative to improve goods and services or create new ones to meet wants and needs Day planner to Smartphone

Economic Systems Market Economy Command Economy Mixed Economy

Decisions are made by the laws of supply and demand Market Economy Decisions are made by the laws of supply and demand 3 Key terms: Supply, Demand and Equilibrium Price Demand: amount or quantity of goods and services consumers are willing to buy at various prices Supply: The amount of goods and services suppliers are willing to supply at various prices Equilibrium price: When quantity of demand and supply meet

Demand $16 $10 Price Per CD $20 $18 $14 $12 100 300 500 700 900 1100 1300 Quantity of CD’s Supplied (Millions per Year) The higher the cost lower demand Consumer driven Demand Curve

Supply $16 $10 Price Per CD $20 $18 $14 $12 100 300 500 700 900 1100 1300 Quantity of CD’s Supplied (Millions per Year) Supply Curve The higher the cost, more production, greater profit Business driven

Equilibrium $16 $10 Price Per CD $20 $18 $14 $12 100 300 500 700 900 1100 1300 Quantity of CD’s Supplied (Millions per Year) Equilibrium Price

Supply Demand Curve $16 $10 Price Per CD $20 $18 $14 $12 100 300 500 700 900 1100 1300 Quantity of CD’s Supplied (Millions per Year) Surplus Drives down cost Inflates cost Shortage

Market Economy Also known as Capitalism Minimal governmental control Motivated by profit

Command Economy Central authority makes key economic decisions 2 types of command economies Communism: Strong command economy where the state makes economic decisions Socialism: Moderate command economy where there is some form of private industry

Mixed Economy A combination of market and command economies State takes care of people needs and private industry takes care of needs

QUESTIONS Name the 4 types of resources and give examples of each. What are the 2 types of command authorities. Explain supply and demand