1. What is Economics Chapter 1

2. Words to Know  Needs  Things that a person cannot live without  Food  Clothing  Shelter  Air

3. Words to Know  Wants  Things people would like to have but are not necessary for survival  IPod  Cell phones  DVD’s/Blue Ray  Luxury cars/trucks  Fashionable Clothing

4. Words to Know  Economics  Study of how people figure out ways to get the things they need and want by making choices.

5. Words To Know  Scarcity  Having a limited number of resources to produce things that people need or want.  Example  Band concert and only so many tickets and seats are available

6. Questions  Describe some needs & wants from the story.  Describe some of the choices that needed to be made  Write a wish list.  What might you have to do to get the items on your wish list?

7. Words to Know  Goods  Things that can be seen, touched, and bought or sold  Physical items  Sunglasses  Popcorn  CD’s

8. Words to Know  Services  Activity performed by one person for another person  Sales person  Doctor  Lawyer  Teachers  Auto mechanics

9. Factors of Production  How things we need are produced  4 factors of production  Land  Labor  Capital  Entrepreneur

10. Factors of Production  Land  All natural resources that are used to produce a good  Things found in nature  Land  Crops  Water

11. Factors of Production  Natural Resources  Items from nature that can be used to create goods and services  Coal  Wood  Sunlight  Water

12. Factors of Production  Labor  People are paid to do to produce goods and services  Labor force  Made up of all the people who work for money  Doctor  Assembly-line worker

13. Factors of Production  Capital  Anything used to produce goods and services  Money  Tools  Machines  factories

14. Factors of Production  Entrepreneur  People who decide how to combine resources to create new goods and services  Bring together land, labor & capital  Start new businesses  Make all the decisions to produce goods and services

15. Economic Systems  Economic System  Organized way society provides goods & services to meet the wants & needs of it people

16. Economic Systems  Types  Command Economy  Market Economy  Mixed Economies  Capitalist Economy  Free Enterprise Economy

17. Economic Systems  Three questions to answer  WHAT should be produced  HOW should it be produced  WHO should receive the good or service

18. Economic Systems  Traditional Economy  Uses habits, customs & religion to answer the WHAT, HOW & WHO questions  Passed down from generation to generation  Small communities  Work together

19. Traditional Economy  Advantage  Each person knows what role they play  Life is stable & predictable  Disadvantage  Difficult to change things  Lower standard of living because of little change

20. Economic Systems  Command Economy  Government makes the economic decisions  Owns land & capital  Controls labor – where they work & what they are paid  Decides what to produce & how much it will cost  Consumers have NO say

21. Command Economy  Advantages  Public services are provided at little or no cost to people  Can change direction quickly  Meets needs of people

22. Command Economy  Disadvantages  Doesn’t meet wants of the people  Wages are similar no matter what job they have  Rarely lose jobs even if performing poorly  Quality of products suffer

23. Economic Systems  Market Economy  People make economic decisions  What gets made  How goods & services are made  Who will consume the goods & services

24. Market Economy  Buyer & sellers exchange goods & services  Each person specializes in producing or providing goods & services  People sell what they have & buy what they want

25. Market Economy  Advantages  Change based on what people want  Freedom  Producers make things that will sell  Consumers can buy what they want  Government has little control

26. Market Economy  Disadvantages  Doesn’t provide enough services that people value – health care, education, justice  A lot of change  Producers worry about someone else making a better product for less money

27. Mixed Economy  Market based economy  Government plays a role  Countries that use mixed economy  United States  Japan  Canada  Great Britain

28. Free Enterprise System  U.S. has a capitalist economy & a free enterprise economy  Competition is allowed  Government has some involvement  People own the factors of production

29. Capitalism & Free Enterprise  4 basic principles   Voluntary Exchange  Private Property Rights  Profit Motive  Competition

30. Capitalism & Free Enterprise  Voluntary Exchange  People buy or sell what they want, when they want  Transactions are good for the buyer and the seller

31. Capitalism & Free Enterprise  Private Property Rights  Right to do what you want with the things they own  Can’t interfere with rights of others  Keep rewards that you earn  Gives people desire to work hard & be successful

32. Capitalism & Free Enterprise  Profit Motive  Making money  Business owners make decisions about the business  Decisions are made by amount of money that will be made

33. Capitalism & Free Enterprise  Competition  Producers what to sell products at the highest price  Consumers what to buy products for the lowest price

34. Government’s Role  Protect citizens  Producers give information to consumers  Laws  Food, drugs & automobiles  Against false advertising  Protect environment  Individual freedoms

35. Individual Freedom  Discrimination  Treat a person a way based on race, gender, religion or age

36. Federal Regulatory Agencies  Environmental Protection Agency  Protect people’s health & environment  Equal Employment Opportunity Commission (EEOC)  Enforcing civil rights laws

37. Federal Regulatory Agencies  Federal Trade Commission (FTC)  Against monopolies  Food & Drug Administration (FDA)  Sets and enforces standards for food, drugs and cosmetics

38. Federal Regulatory Agencies  Occupational Safety and Health Administration (OSHA)  Save lives  Prevent injuries  Protect health of workers