5. Good Anything that can be grown or manufactured (made) Food Clothes
Cars

6. Service
Something a person does for someone else in exchange for money or value.
Doctor
Hairdresser
waiter

7. Resources
Natural
Human
Capital
Combine to make goods and services

8. Businesses provide households with income and goods and services.
Households supply businesses with labor (workforce) and payments for goods and services
The government supplies businesses with public goods and services and payments for products purchased.
Households provide the government with labor (workforce) and taxes
Businesses provide the government with taxes and goods and services.
The government provides households with income and public goods and services.

9. Production, Consumption and Distribution
Four Questions all Economic Systems must Address
Production, Consumption and Distribution

10. Four Questions All Economic Systems must address…
What is produced?
*Production*
Goods and services must satisfy the consumers wants and desires

11. Four Questions All Economic Systems must address…
HOW should these goods be produced?
*Factors of Production*
Capital
Entrepreneurship
Land
Labor
Combine the factors of production to make or produce the goods and services

12. Four Questions All Economic Systems must address…
For WHOM are the goods and services produced?
*Distribution*
Getting the goods and services producer to consumer

13. Four Questions All Economic Systems must address…
HOW MANY goods and services should be produced?
*Consumption*
Make enough to have a large profit and still have consumer demand. How many is determined by supply and demand.

15. Supply and Demand

16. Supply and Demand determine price through their interaction
DEMAND: is the amount of a good or service that consumers are willing and able to buy at a certain price
SUPPLY: is the amount of a good or service that producers are willing and able to sell at a certain price.

17. LAW OF SUPPLY : LAW OF DEMAND: Businesses will provide more products
when they can sell them at higher prices
LAW OF DEMAND:
Buyers will demand more products
when they can buy them at lower prices

18. Supply and Demand…
Scarcity is the inability to satisfy all wants at the same time due to limited resources
Choices must be made as to what to produce, how much to produce and who will receive what is produced.
PRICE: Mechanism to decide who gets goods and services. The amount that satisfies both producers for profit and consumers for value.

19. Scarcity

20. Scarcity The inability to satisfy all wants at the same time;
the NEEDS are greater than the RESOURCES

21. Since resources are LIMITED consumers and producers must make CHOICES
CHOICE: selecting from a set of alternatives
OPPORTUNITY COST: what is given up when the choice is made.

22. *Scarcity forces us to choose which needs and wants to satisfy with available resources. *Scarcity affects decisions concerning what and how much to produce, how goods and services will be produced and who will get what is produced

23. Price

24. Choices

25. Three Types Command Mixed Free Market
Economic Systems
Three Types
Command
Mixed
Free Market

26. Command Economy
The central government makes decisions and determines how resources will be used.
The central government owns property and resources.
Businesses are not run for profit.
Businesses are not run for profit.
No competition
Lack of consumer choice
The government sets the prices of goods and services.
China, North Korea, Cuba

27. Mixed Economy Most common type of economic system
Government and individuals share the decision making process
Individuals and businesses make decisions for the private sector
Individuals own the means of production
Government makes plans for the public sector
Government guides and regulates production of goods and services offered.
A greater government role than in a free market economy
Most effective economy for providing goods and services
U.S. and most Western European countries are mixed economies

28. Free Market Economy Also known as capitalism or free enterprise
Private ownership of property and resources (owned by individuals)
Individuals and businesses make profits
Individuals and businesses compete
Economic decisions are made by supply and demand
Profit is a motivator for productivity
No government involvement
Consumer sovereignty: buyers determine what is produced

29. COMPETITION PROFIT The U.S. economy is FREE a MIXED MARKETS ECONOMY
Rivalry between businesses for the same customers; results in better quality
Money left over after all business expenses have been paid.
COMPETITION
PROFIT
Individuals can own the means of production & property without undue government interference
The U.S. economy is
a MIXED
ECONOMY
FREE
MARKETS
PRIVATE
PROPERTY
Markets are allowed to operate without undue interference from the government. Money, goods and services flow continuously among individual households, businesses and the government
Consumers determine what goods and services are produced by what they buy
CONSUMER
SOVEREIGNTY