1. ECONOMICS
Unit 2
The way a country manages its money and resources to produce, buy, and sell goods and services

2. Command Economy Definition: prices are controlled by the government
The government controls the supply of a product (how much is made and how much it costs)
Ex: the Soviet Union and Communist countries
BRAINSTORM: why might command economies fail?

3. Market Economy
Definition: prices and goods are controlled by the Supply and Demand
Companies decide how much of a product (iphone) to make based on how many people want it (aka demand)
Companies also set the prices for the products they produce
Ex: many countries work toward this economy
BRAINSTORM: why might a market economy be a good thing?

4. Mixed Economy
Definition: both the government and companies work together
They decide prices
They both decide what products to produce based on demand
Example: The United States, Great Britain, etc.
Brainstorm: Is this economic system always successful?

5. The Law of Supply and Demand
Definition: the understanding that the supply of an item effects the demand.
- If the supply is LARGE then the demand will be small.
- If the supply is small then the demand will be LARGE

6. Examples:
1. Air Jordan’s are being sold for 100 dollars for a pair of shoes. They are very popular and the store is always selling out.
- Supply: up or down? Demand up or down?
What should the producer do to the price? Raise or lower
2. The Iphone 5 is replaced by a newer, better version, the Iphone 5BILLION. Apple suddenly can’t sell any Iphone 5’s. Supply is: up or down? Demand is: up or down?
What should Apple do to the price to sell more?

7. 3. Write your own example showing supply and demand.
-Solve your example

8. https://americanheritage. byu

9. Circular Flow Notes Households: Businesses: (producers) Governments:
Provide businesses with labor and pay for goods and services
Provide government with labor and taxes
Businesses: (producers)
Pay households income and with goods and services
Pay governments taxes and goods and services
Governments:
gives businesses payment for goods and services
provides households with income and goods and services

11. Types of taxation
Progressive Tax: people who make more money are taxed more
Regressive Tax: people who make less are taxed more
Proportional Tax: people pay the same no matter how much they make