Who are Producers? Who are Consumers? Person or people that make a good or provide a service (Sellers) Person or people that use or purchase a good or a service (Buyers)

What is a Market? wherever goods/services are sold and/or consumed

What meant by the term “Domestic”? What is meant by the term “Foreign”? Within your own country Examples Ford is a domestic car producer The USA is our domestic Market Outside of your country Examples (Japan) is a foreign car producer When Ford sells cars in Brazil, it is selling in a foreign market

Why do we trade & not produce all our needs/wants here in the USA? Maybe we don’t have the resources necessary to produce something Maybe needs/wants can be produced with better quality in another country Maybe needs/wants can be produced at a lower cost (cheaper) in another country

How does trade help American consumers (like you & me)? I’m a happy American consumer! Free Trade gives me more goods to choose from. Free Trade also allows me to get the goods I want cheaper, so I can buy more with the money I have...Goods make me happy!!!!!!!

How does trade help American producers (like Ford & Nike)? We like Free Trade, because we can sell our trucks all over the world to more people & we can make more money. …..Money makes us happy! We like Free Trade, because we can sell our shoes all over the world to more people & we can make more money. …..Money makes us happy!

(R20-C) Voluntary “Free” Trade Domestic Market (USA) Foreign Markets (Other Countries) Foreign Goods US Goods BENEFITS: US Producers can sell goods to more people around the world (bigger Marketplace = More $) More $ for US Producers means more jobs for US workers US Consumers have more choices and possibly cheaper prices RISKS: Foreign Producers may have cheaper goods & could possibly run US Producers out of business If US Producers lose money or go out of business, that can mean less jobs for US workers “Market” wherever goods/services are sold or consumed

Human-Made Trade Barriers Tariff – Tariff – a Tax on Imported Goods (makes them more expensive & makes it less likely consumers will buy) Quota- A Limit on the amount of goods that can be imported from another country. Embargo- Embargo- A total Ban on trade with a country – Usually motivated by politics to hurt another country economically.

So why do governments put barriers in place? They do it to make foreign goods more expensive, so domestic consumers are more likely to choose to buy the cheaper domestic products. This gives domestic companies an advantage b/c domestic consumers will most likely choose them. I bought stuff made in the US b/c it’s cheaper. …I’m Smart! American Consumer Let’s review how this works……

You go shopping for a car…. You find two cars you like equally. One is a Ford & one is a Toyota. The Prices are as follows: $10,000 $9,500 Which one are you more likely to choose? If, you really like them equally, most people would choose the Toyota & save $500 Now, Let’s say there’s a 10% tariff on Foreign Cars sold in the US….. The Prices are now as follows: $10,000 $10,450 Now, Which one are you more likely to choose? If, you really like them equally, most people would choose the Ford & save $450 This is how trade barriers give domestic companies, like Ford an advantage.

R20-C Trade Barriers (Tariff – Quota – Embargo) Domestic Market (USA) Foreign Markets (Other Countries) Foreign Goods US Goods BENEFITS: US Producers do not have to worry as much about competition with foreign producers US Producers can charge more for their goods & services US Producers may be less likely to fire people if they make more guaranteed $ RISKS: Foreign countries may respond with trade barriers against US Producers US Producers may lose the foreign markets & will have less consumers to sell to = Less $ US Consumers will have less choices & will most likely pay more than they would w/ Free Trade “Market” wherever goods/services are sold or consumed

(R21) The 4 Factors of Production

Today’s Standard SS6E7 The student will describe the factors that cause economic growth and examine their presence or absence in Europe.

Intro to our Essential Question…….. What are the 4 Factors of Production?

What is Production? Production is: 1. How goods are made with resources 2. How services are performed **Production of any sort requires a resource or a combination of resources

1. Natural Resources Natural resources are gifts of nature that are used to make products. Examples: Plants, Mined Metals, Animals, Oil, Coal, Minerals, etc.

2. Human Capital Human Capital (aka-Labor) include the people with skills necessary to produce a product or perform a service. Examples: Lumberjacks, Doctors, Teachers, Lawyers, Factory Workers, Truck Drivers, etc.

3. Physical Capital Physical Capital resources are the tools and machines that humans need to turn natural resources into final products. Examples: Chainsaws, Trucks, Factories, Computers, Drills, Mining Rigs, etc.

4. Entrepreneurship Entrepreneurs are those people who come up with the idea for a product or service and bring the necessary resources together to make it happen. Basically……..the people with the idea.

Entrepreneurship ~Competition in a Market Economy~ $$$$ The Money of Consumers $$$ P P P P P = Producer

Entrepreneurship These people are the brains & the money behind production. They have an idea, develop a plan to make that idea a reality, & implement the plan….. All in the hopes of making money. Russell Simmons (Def Jam Records, Phat Farm Clothing) Ted Turner (CNN, Atlanta Braves) Oprah Winfrey (Harpo Industries) Bill Gates (Microsoft)

Return to our Essential Question…….. What are the 4 Factors of Production?