Economic Activity and Productivity. To the economist, a market is a location or situation where buyers and sellers exchange an economic product Markets.

Slides:



Advertisements
Similar presentations
Economics Chapter 1 Section 2.
Advertisements

Unit 4 4th Grade Social Studies Vocabulary
Chapter 19: The American Economy
The American Economy What are the major factors and theories that determine how people and businesses make economic decisions in the USA?
Modules 7 – 8 Adam Smith and Economics
APK: WHO IS MORE IMPORTANT?
What is Economics? Chapter 1, Lesson Two.
Circular Flow and Gross Domestic Product
Objectives Analyze a circular flow model of a pure market economy.
The American Economy Chapter 19 Notes.
Economic Flow and Economic Growth.  A model is a graph or diagram used to explain something.  The circular flow model shows how resources, good and.
What is Economics? Chapter 1.
Ch. 19 The American Economy Section 1 Economic Resources.
BUSINESS BASICS Final BUSINESS BASICS Final. An entrepreneur is a risk-taker in search of profits.
LCJSMS WE THE STUDENTS 8 TH GRADE 2013 Economics.
Bell Starter (Section 1) Key Terms  Goods  Services  Factors of production  Natural resources  Labor Key Terms  Capital  Entrepreneur  Gross Domestic.
Circular Flow Diagrams
Introduction to Economics. What Is It? Economics – the study of how people try to satisfy what appear to be unlimited and competing wants through the.
Cook Spring  What is Economics? ◦ The study of how we make decisions  What is the fundamental problem facing all societies? ◦ Scarcity – not having.
The American Economy Today, you will need notebook paper.
Chapter 19 Objectives: 7.01, 7.04, 7.05, 7.06, 8.02, 8.03, 8.06, 9.01.
How money and goods flow in a Market Economy. What is a Market? A market is an arrangement that allows buyers and sellers to exchange things.
ECONOMIC PRINCIPLES CH. 18&19. GOODS AND SERVICES Goods- production output in the form of material items such as books, movies, or automobiles Services-
Understanding the circular flow of income. HOUSEHOLDS RESOURCE OWNERS Business firms Money payments Income payments Wages, Rent, Interest, Profits Consumer.
Economic Activity and Productivity
Chapter 17 Sec 2. Bell Ringer What do you do to get your pizza? What happens with the money you give the pizza shop? Name something the pizza shop owners.
Basic Economic Concepts Key Terms –good –consumer good –capital good –service –value –paradox of value –utility –wealth –economic product –market –factor.
Bell Ringer:  What material things would you like to own?  Make a list!
The American Economy Chapter 19. Economic Resources Chapter 19.
Chapter 1.2 notes Basic concepts and key terms. Types of Economic Products goods and services that are useful, relatively scarce, and transferable to.
Basic Economic Concepts.  Economics is concerned with economics products, which are goods and services that are useful relatively scarce, and transferable.
Chapter 19 Review 56 Slides in 45 minutes 40 Question Test Time is a valuable economic resource don’t waste it.
The American Economy.
What is Economics? Chapter 1.
Circular Flow Diagrams Economists use the circular flow diagram to show the high degree of economic interdependence in our economy. Money flows in one.
What is Economics? How Economic Systems Work Economic Resources Capitalism and Free Enterprise.
Warmup 4/12/12  What are the 4 factors of production?
Economic Activity and Productivity. To the economist, a market is a location or situation where buyers and sellers exchange an economic product Markets.
The Circular Flow of Economic Activity
Economic Activity 8.03 Explain the circular flow of economic activities and how interactions determine the prices of goods and services. Part-time workers.
Economic Activity Chapter 19, Section 2. I. Circular Flow of Economic Activity  Market – any economic situation in which there is a willing exchange.
Warm Up #2 1.What is the purpose of a grand jury proceeding? 2.Why does scarcity exist? 3.Explain the difference between FIXED and VARIABLE cost. 4.How.
Economics- Using Economic Models Chapter 1, Lesson 3.
Circular Flow Diagrams
The American Economy Chapter 19.
The American Economy What are the major factors and theories that determine how people and businesses make economic decisions in the USA?
The Fundamental Economic Problem
Chapter 19 Objectives: 7.01, 7.04, 7.05, 7.06, 8.02, 8.03, 8.06, 9.01.
Chapter 19 The American Economy.
The American Economy Chapter 19.
BASIC ECONOMIC CONCEPTS
Unit 8, Lesson 4 Economic Activity and Productivity
Productivity and Economic Growth
Economic Activity 19.2.
Ch. 1 Section 2 & 3 Guided Notes
Economic Activity and Productivity
Economic Activity and Productivity
Circular flow SSEMI1.
Basic Economic Concepts
Basic Economic Concepts
The American Economy What are the major factors and theories that determine how people and businesses make economic decisions in the USA?
Unit 1 Objectives After studying this unit, students will be able to:
Economic Activity and Productivity
What is Economics?.
BASIC ECONOMIC CONCEPTS
Chapter 19, Section 2 Economic Activity and Productivity
Fundamental of Economics Continued
The American Economy What are the major factors and theories that determine how people and businesses make economic decisions in the USA?
What is Economics?.
Economic Activity and Productivity
Presentation transcript:

Economic Activity and Productivity

To the economist, a market is a location or situation where buyers and sellers exchange an economic product Markets may be local, regional, national, or global The flow of resources, goods and services, and money in a market system between the groups of economic decision makers is circular Economists use the circular flow diagram (an economic model) to illustrate how the market system works (look at the model on page 429 of your online textbook)

Groups of Economic Decision Makers 1. The consumer sector Earn their income in factor markets Workers earn wages, salaries, tips in exchange of their labor People who own land can loan it out in exchange for rent (income) People who own capital exchange it for interest Individuals receive their incomes and spend it in product markets Purchases about 2/3 of all output (GDP)

2. The business sector Receives payments in the product markets where they sell goods and services to consumers Use the payments to pay for natural resources, labor, and capital they use The resources are then used to manufacture additional products that are sold in product markets Usually consumes about 15 to 20 percent of GDP

Look at the circular flow diagram on page 429 of your online textbook at the consumer and business sectors The business sector purchases some of the output it produces-primarily capital goods- so that it can continue to produce more goods and services -these purchases include items like tools, factories, and other goods needed for current production

3. The Government Sector Consists of all three levels of government (local, state, and national) Produces goods and services (transportation, housing, education, health, etc) and purchases productive input in the factor markets Receives revenue for the services that it sells (bus fare, postage stamps, etc.) but the total costs of government services is seldom covered by the fees alone and receives most of its revenue from taxes Revenue is used to purchase final goods and services in the product markets (schools buy textbooks) Purchases apx 20% of the GDP

4. The foreign sector Represents all the countries in the world The United States sells products to, and purchases products from other countries The value of goods and services that the US sells to other countries tends to offset the purchases that the US makes from other countries Less than 4% of the GDP

Productivity and Economic Growth Economic growth occurs when a nation’s total output of goods and services increases over time The circular flow becomes larger with more factors of production, goods, and services flowing one direction, and more payments flowing in the opposite direction Economic growth is important because it increases people’s standard of living

Productivity Everyone benefits when scarce resources are used efficiently. Productivity goes up whenever more output can be produced with the same amount of inputs in the same amount of time or when the same output can be produced with less input Often discussed in terms of labor, but is applied to all factors of production Business owners try to buy the most efficient capital goods and farmers try to use the most fertile soil for crops

Specialization When people, businesses, regions, and/or countries concentrate on goods or services that they can produce better than anyone else Improves productivity Nearly everyone depends on others to produce the things that he or she consumes Specialization occurs because we earn more money and it is more efficient doing so When people specialize, they are more productive than by attemping to do many things

Division of Labor The breaking down of tasks into smaller, separate tasks which are performed by different workers A form of specialization that improves productivity Makes use of different skills and abilities

Human Capital The sum of the skills, abilities, and motivation of people Increases productivity Investments by government and businesses in training, health care, and employee motivation tend to increase the amount of production that takes place with a given amount of labor Employers are usually rewarded with higher-quality products and increased profits Workers often benefit from higher pay, better jobs, and more satisfaction with their work

Economic Interdependence American economy displays because of specialization Americans are relied upon and rely on others to provide goods and services that are consumed Events in one place can affect or impact other places Example: dairy prices increase because government subsidy is removed, ice cream price goes up Gain in productivity and income that results from increased specialization usually offsets the costs associated with the loss of self-sufficiency.