1. What is Economics?

2. Economics Study of how people seek to satisfy their needs and wants by making choices.

3. Dissecting the Definition Needs: something like air, food, shelter that is necessary for survival Wants: an item that we desire but that is not essential to survival

4. Microeconomics  Study of economic behavior & decision making of small units, such as individuals, families, & businesses  Individual decision making is micro (small)

5. Macroeconomics  Study of economic behavior & decision making of entire economies  Examines major trends for the economy as a whole  Societal decision making is macro (large)

6. Three Basic Questions??? In economics there are 3 basic questions that every country must answer…  What to produce?  How to produce?  For whom should we produce?

7. Economic Systems A set of rules by which a nation answers the basic questions of what, how, and for whom to produce.

8. Types of Economic Systems Traditional Command Market Mixed

9. Traditional Decisions are based mostly on customs Difficult to change Mostly in underdeveloped countries/3 rd world countries Example: Chad

10. Traditional Advantages versus Disadvantages Advantages Low unemployment rate Little or no money is used Disadvantages Not much economic growth Little scientific development No choices Low standard of living

11. Command Government ownership & control of production Government makes ALL decisions 2 main types Socialism & Communism Example: North Korea

12. Command Advantages versus Disadvantages Advantages Focuses on Equality Capable of rapid change Economies are very stable Disadvantages Very little individual freedom No reason for hard work

13. Market Means of production are owned & controlled by private individuals or groups Government plays a small role Market determines how resources are used Cannot be found today

14. Market Advantages versus Disadvantages Advantages Can adjust easily to change Competition No government interference Unlimited opportunities to make money Disadvantages Society does not always get basic needs Higher risk for failure Monopolies are present

15. Mixed Government plays limited but some role in decision making Focuses on Free Enterprise System Usually 70% individual control & 30% government control  Sometimes other way around but very rare Example: United States

16. Additional Info/Vocabulary Terms Allocate  to divide among or distribute in shares

17. Additional Info/Vocabulary Terms Resources  the means to accomplish something

18. Additional Info/Vocabulary Terms Division of Labor  Separate the process of production into specific tasks

19. Additional Info/Vocabulary Terms Specialization  Concentrate labor on single tasks