1. Buy truth, and do not sell it, Get wisdom and instruction and understanding.
Proverbs 23:23
Dietrich Bonhoeffer

2. No man in the whole world can change truth
No man in the whole world can change truth. One can only look for the truth, find it and serve it. The truth is all places.
The Ordeal
Hamburg, Germany

3. Three Economic Questions
Economics
Mr. Osburn

4. What goods and services should be produced?
Each society must decide what to produce to satisfy its needs and wants.
How much of our resources should we devote to national defense, education, public health and welfare, or consumer goods?
Rank these in order of importance
Which consumer goods should we produce?
Which consumer goods are most important in America?

5. How should these goods and services be produced?
Each society must decide how to use its resources to produce goods and services
Should we produce electricity with oil, solar power or nuclear power?
Should teachers have classes of 20 or 50 students?
Should we produce food on large corporate farms or small family farms?
Factors of Production can be combined in different ways.

7. Who consumes these goods and services?
By the end of the 1990s, the top 25 manufacturers in the USA were launching an average of 13 new products every day.
Millions of items available on Amazon.com
During “Cyber Monday”, Amazon sold 500 items per second (2014)
The USA produces 3,000,000 cars each year (8,219 per day) only 5% of the worlds total production.
How do all of these products get divided?
Who gets the luxury car vs. a bus pass?
Who goes on vacations vs. who stays at home?
Who gets access to a good education?
How much should teachers earn versus how much doctors should earn?

8. Factor Payments: the income people receive for supplying factors of production—land, labor, capital.
Landowners get rent
Workers get wages
People that lend money to build factories receive interest

9. Six Economic Goals

10. Making the most of resources with limited waste
Economic Goals
Efficiency
Making the most of resources with limited waste

11. Efficiency

12. Making the most of resources with limited waste
Economic Goals
Efficiency
Making the most of resources with limited waste
Freedom
Individuals and Businesses have the economic freedom to use their resources how they wish without government intervention

13. Freedom

14. Making the most of resources with limited waste
Economic Goals
Efficiency
Making the most of resources with limited waste
Freedom
Individuals and Businesses have the economic freedom to use their resources how they wish without government intervention
Security
Seeks to provide the less fortunate with food, shelter, and health care

15. Security

16. Making the most of resources with limited waste
Economic Goals
Efficiency
Making the most of resources with limited waste
Freedom
Individuals and Businesses have the economic freedom to use their resources how they wish without government intervention
Security and Predictability
Seeks to provide the less fortunate with food, shelter, and health care
Equity
Fair distribution of society’s wealth

17. Equity Chief Executives $176,840 2. Petroleum Engineers $147,470
3. Architectural and Engineering Managers
$133,240
4. Lawyers
$130,880
5. Natural Sciences Managers
$130,400
6. Marketing Managers
$129,870
7. Computer and Information Systems Managers
$129,130
8. Airline Pilots, Copilots, and Flight Engineers
$128,760
9. Financial Managers
$123,260
10. Sales Managers
$119,980

18. Making the most of resources with limited waste
Economic Goals
Efficiency
Making the most of resources with limited waste
Freedom
Individuals and Businesses have the economic freedom to use their resources how they wish without government intervention
Security and Predictability
Seeks to provide the less fortunate with food, shelter, and health care
Equity
Fair distribution of society’s wealth
Growth
Producing more and better goods and services leads to an improved standard of living (spurred by innovation)

19. Growth

20. Innovation

21. Making the most of resources with limited waste
Economic Goals
Efficiency
Making the most of resources with limited waste
Freedom
Individuals and Businesses have the economic freedom to use their resources how they wish without government intervention
Security and Predictability
Seeks to provide the less fortunate with food, shelter, and health care
Equity
Fair distribution of society’s wealth
Growth and Innovation
Producing more and better goods and services leads to an improved standard of living (spurred by innovation)
Stability
Goods and services and jobs are available, prices are predictable

22. Stability

23. Economic Systems
An Economic System is the method used by a society to produce and distribute goods and services.
Created to best answer the problem of scarcity.
A society will choose an economic system that aligns with their goals and values.

24. Traditional Economy
Relies on habit and custom to decide what to produce, how to produce it, and whom to distribute it.
Little room for innovation or growth
Boys will take the occupations of their fathers, girls follow their mothers
Resist change—lack modern conveniences and have a low standard of living

25. Traditional Economy Case Study
Maasai people of East Africa
Semi-nomadic herding people
Livestock is the mainstay of their economy
Wealth is measured in cattle and children
Diet consists of meat, blood, and milk
Labor: divided along gender lines
Men: build enclosures to protect the cattle from lions
Boys: graze the cattle
Women and girls: milk the cattle
Main goals: security and stability

26. Command Economy
Central government alone decides how to answer all three key economic questions.

27. Command Economy Case Study
Ancient Egypt
Imposed economic choices on society
Building projects and military adventures
Pyramids, defensive walls, temples, roads, etc.
Main Goals: Security and Equity (maybe)

28. Market Economy
Economic decisions are made by individuals and are based on trade.
Choices made by individuals determine what gets made and how, as well as who consumes the goods.
Also called free markets or capitalism.

29. Market Economy Case Study
United States (almost)
Decisions of individual producers and consumers
Main Goals: Freedom and Efficiency
“Every individual…neither intends to promote the public interest, nor knows how much he is promoting it…He intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention…By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.”
Adam Smith, The Wealth of Nations, 1776

30. Finish Section 3.3
Page 42-44
Homework: online interactive notebook (3.3) Question #1 (table only)

31. Mixed economy
Combination of traditional, market, and centrally planned economies.