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Economics
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What is economics The study of how society chooses to use resources, to produce and distribute goods and services for peoples consumption Isms
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Factors of production All components (resources)necessary to produce society's goods and services Management of resources is the biggest problem Resource shortage is scarcity
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Natural resources Raw materials found in nature Becomes a factor of production when used to produce goods The economy of many countries are based upon its natural resources Two types: Renewable and Non-Rewable
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Human resources Knowledge, efforts and skills people bring to their work Also known as labor
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Capital resources Things used to produce goods and services
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Entrepreneurial resources
The initiative to improve goods and services or create new ones to meet wants and needs Day planner to Smartphone
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Economic Systems Market Economy Command Economy Mixed Economy
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Decisions are made by the laws of supply and demand
Market Economy Decisions are made by the laws of supply and demand 3 Key terms: Supply, Demand and Equilibrium Price Demand: amount or quantity of goods and services consumers are willing to buy at various prices Supply: The amount of goods and services suppliers are willing to supply at various prices Equilibrium price: When quantity of demand and supply meet
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Demand $16 $10 Price Per CD $20 $18 $14 $12 100 300 500 700 900 1100
1300 Quantity of CD’s Supplied (Millions per Year) The higher the cost lower demand Consumer driven Demand Curve
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Supply $16 $10 Price Per CD $20 $18 $14 $12 100 300 500 700 900 1100
1300 Quantity of CD’s Supplied (Millions per Year) Supply Curve The higher the cost, more production, greater profit Business driven
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Equilibrium $16 $10 Price Per CD $20 $18 $14 $12 100 300 500 700 900
1100 1300 Quantity of CD’s Supplied (Millions per Year) Equilibrium Price
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Supply Demand Curve $16 $10 Price Per CD $20 $18 $14 $12 100 300 500
700 900 1100 1300 Quantity of CD’s Supplied (Millions per Year) Surplus Drives down cost Inflates cost Shortage
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Market Economy Also known as Capitalism Minimal governmental control Motivated by profit
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Command Economy Central authority makes key economic decisions 2 types of command economies Communism: Strong command economy where the state makes economic decisions Socialism: Moderate command economy where there is some form of private industry
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Mixed Economy A combination of market and command economies State takes care of people needs and private industry takes care of needs
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QUESTIONS Name the 4 types of resources and give examples of each. What are the 2 types of command authorities. Explain supply and demand
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