1. Marketing Principles CHAPTER 3 SECTION 1

2.  Economy – the organized way a nation provides for the needs and wants of its people  Economic resources – all the things used in producing goods and services  Factors of production – land, capital, labor, and entrepreneurship

3.  Land includes everything contained in the earth or found in the seas  Natural resources are used as the raw materials for creating goods and services  Labor refers to all the people that work  A well-trained labor force is an asset to a company

4.  Capital includes money to start and operate a business.  Capital is also buildings, computers, tools, and infrastructure.  Infrastructure – physical development of a country  Entrepreneurship – skills of people that are willing to invest their time and money to run a business

5.  Different economies have different amounts of economic resources.  The United States has an educated labor force, a great deal of capital, an abundance of entrepreneurs, and many natural resources.  The difference between wants and needs and available resources is called scarcity.

6.  Nations must answer three basic economic questions: 1. What should be produced 2. How should it be produced 3. For whom should it be produced  Traditional economy – farming and barter trade system

7.  Market economy – law of supply and demand with little government control  Command economic system – government determines everything  No economy is purely traditional, market, or command economic system  The United States is considered a mixed economy which leans toward a market economy

8.  Capitalism is a political and economic philosophy characterized by marketplace competition and private ownership of businesses.  An advantage of capitalism is that successful employers and employees prosper.  Government in a capitalist society is also concerned about its people and cares for those who cannot care for themselves

9.  The government has policies and laws that affect the market.  The United States and Japan are two examples of capitalism.  Communism is a social, political, and economic philosophy in which the government controls the factors of production.

10.  There is no private ownership of property or capital.  People are given jobs that fit their abilities.  They are given the goods that fit their needs.  All people who are able to work are assigned jobs.  The government decides what schooling people will receive and tells them where to live.

11.  Medical care is free.  No financial incentive for people to be more productive.  Cuba and North Korea are examples  Socialism originally referred to a system on its way to communist ideal of a classless society

12.  The main goal is to meet the basic needs of for all and to provide employment for many.  Medical care and education are free or inexpensive.  Tend to have more social services to ensure a certain standard of living for everyone.  Businesses and individuals pay much higher taxes than those in capitalist countries.

13.  Canada, Germany, and Sweden are examples  Privatization – gov’t selling gov’t owned businesses to private individuals or businesses  Nationalization occurs when the gov’t takes over a privately held company.