1. Comparing Economic Systems

2. Economics is the study of …?

3. Economics is the study of human efforts to satisfy unlimited wants and needs through the use of limited resources.

4. Every country has to choose how to use its resources to produce and distribute goods and services What and how much should be produced? How should goods be produced? Who gets the goods and services

5. Resources Peoples wants and needs are unlimited Resources to fill those wants and needs are limited Whose wants and needs are fulfilled and to what extent are they fulfilled?

6. Resources Food Energy Labor Raw Materials Services

7. An economic system is The system or way a country chooses to use and distribute…its resources to produce and distribute goods and services for its people. Capitalism Socialism Communism

8. Capitalism An economic system based on private ownership of productive property (farmers fields, gold, natural resources) U.S., Germany and Japan

9. Four Factors of Production Land – resources Labor - work Management (MGMT) – organize and decide Capital - $ and machinery

10. Pizza Shop Land

11. Pizza Shop labor

12. Pizza Shop Management

13. Pizza Shop Capital

14. Capitalist Has capital and puts it to productive use

15. Another name for a capitalist economy Free-Enterprise system Free – Market system People are free to start and run their own businesses

16. Free Enterprise System Five characteristics of a free enterprise system –Private Ownership –Guarantee of Property Rights –Private Decision Makers –Competition –Freedom of Choice

17. Private Ownership –individuals or groups own most of the means of production

18. Guarantee of Property Rights –right to own property

19. Private Decision Makers –decisions of what to produce left to individuals and companies –decisions of how to produce left to individuals and companies –decisions of how much to produce left to individuals and companies

20. Competition –businesses compete with one another –law of supply and demand

21. Freedom of Choice –consumers can choose from many products and services

22. Does the United States really have a capitalist economy? Are we really free to do whatever we want with our productive property?

23. Mixed Economy Why is the U.S. called, a mixed economy? Private business and the government play a part in the economic system Regulation of business – cars – seatbelts Government runs business Government grants license or utility – PECO, Comcast, Pa American Water Company

24. Advantages of A Capitalist System Everyone has an opportunity to succeed “The harder you work, the greater the reward” Spawns/rewards innovation Coexists with “human nature” “Greed is good!” Allows for a high degree of freedom Works along side democracy Economies of a country grow rapidly

25. Advantages of A Capitalist System Adam Smith – (Father of Capitalism, author of The Wealth of Nations, 1776) –The free market benefits society –Self interest leads to a collective good

26. Disadvantages of A Capitalist System Inequality; Benefits not distributed equally Can lead to irrational behavior; “Greed is Good? Creation of Monopolies Great poverty Limited government control People are not treated fairly Failure of the “American Dream”

27. Kinds of Business in a Free Enterprise System KindAdvantagesDisadvantages Sole Proprietorship -A business owned by one person Partnership - A business owned by two or more people Corporation - Has many owners called share holders. Corporations are owned by the public

28. Sole proprietorship

29. Partnership

30. Corporation

31. 80% of U.S. business are small businesses

32. Capitalism A different approach –Capitalism is not about “Greed” or maximizing your profit by being a winner and beating your competition. –The way to maximize your benefit is not just seek your own self interest but to seek a way that benefits the group as well –Capitalism is about people acting in each other’s own self interest and the society benefiting as a result. This works because achieving your self interest requires serving others.

33. Capitalism In order to profit you have to provide a product or service some one else values. Bill Gates, Michael Dell, and Stephen Jobs are very, very wealthy because everyone values Microsoft Windows and Office, iPhones, Macs, and laptops. John Nash Ideas beyond the left/right, red/blue, and liberal/conservative thinkingJohn Nash Ideas beyond the left/right, red/blue, and liberal/conservative thinking

34. Pure Capitalism Gov. Economy

35. Mixed Economy Gov.Economy

36. Capitalism

37. Real People Capitalism and "real people"

38. Capitalism Benefits the Common Man! “Chances to Succeed” – K Allen “Creates the best products” – M Purcell “encourages competition” – B Hagel “We can own our own businesses” – A Jablonski, A Manning, J Bankowski “Opportunity to make our own $” – J Pigeon “Encourages/rewards our best effort” – B Chronister “Working to benefits others through your own personal benefits” – A Ignus, A Alford “Earn what you work for” – N Martorella

39. Capitalism Benefits the Common Man! “the market leans toward efficiency” – C Madrack “create opportunity for yourself” – H Falco “gives you more freedom” – M Kampmeier

40. Capitalism Benefits the Common Man! “keeps prices low” – N Ozoroski “equal opportunity to succeed” – A Machita, C Rivers “consumers have choices” – J Schwed Competition leads to better performance” – P Sheridan “Allows for better products to become available” M Cravetz “People can profit” – M Collilouri, Joey Villante “Incentive/motivation to better themselves” – A Stagliano, D McCrary ‘Start you own business” - B Nguyen, J Culp “Competition leads to better prices” – J Cook

41. Capitalism Benefits the Common Man!

42. Time for the Quiz

43. AP Government Chapter 1 Text Question James Madison, wrote” If men were angels, no government would be necessary. If angels were to govern men, neither external or internal controls on government would be necessary.” Explain what this quote means and what kind of controls Madison put into the Constitution a a consequence of his beliefs.