1. Introduction to Business & Marketing
Economics - Day 2
Introduction to Business & Marketing

2. Review What is Economy? What are Resources?
What are Factors of Production?
Land
Labor
Capital
Entrepreneurship

3. Activity
Identify each of the following with appropriate Factor of Production: land, labor, capital, entrepreneurship 1. You plan to make and sell custom skateboards. 2. Both you and your friend have part-time jobs at a woodworking factory. 3. You will decorate the boards by using dried leaves. 4. You have been able to buy materials for 15 boards.

4. Activity Answers
Identify each of the following with appropriate Factor of Production: land, labor, capital, entrepreneurship
You plan to make and sell custom skateboards.
- entrepreneurship
2. Both you and your friend have part-time jobs at a woodworking factory.
- labor
3. You will decorate the boards by using dried leaves.
- land
4. You have been able to buy materials for 15 boards.
- capital

5. How Does an Economy Work
There are three fundamental economic questions:
What goods & services should be produced?
How should goods & services be produced?
For whom should goods & services be produced?

6. Types of Economies Market Economy – no government involvement
Command Economy – government makes all decisions
Mixed Economy – combination of Market and Command

7. Market Economy
There is no government involvement in economic decisions
WHAT: consumers decide what to produce goods & services
HOW: businesses decided how to produce goods & services
FOR WHOM: the people with more money are able to buy more goods & services

8. Command Economy
Government has complete involvement in economic decisions
WHAT: one person (dictator) decides what to produce goods & services
HOW: the government owns ALL means of production and runs all businesses
FOR WHOM: the government decides who receives goods & services

9. Mixed Economy Combination of Market & Command economy
USA is a Mixed Economy
WHAT: the people & government decide together what to produce goods & services
HOW: the people & government decide together how to produce goods & services
FOR WHOM: the people & government decide together who receives the goods & services

10. How to Measure An Economy?
Economic indicators that measure an economy:
Productivity: output per worker hour measured over period of time
Gross Domestic Product (GDP): output of goods & services produced by labor
Standard of Living: level of material comfort in terms of products available to a group of people
Consumer Price Index (CPI): measures change in price over a time period
Consumer Confidence: degree of optimism that consumers feel about the overall state of the economy
Unemployment Rate: percentage of workforce that is unemployed at any given date

11. What Makes A Healthy Economy?
The characteristics of a healthy economy are:
high productivity
stable prices
low unemployment