1. Political and Economic Analysis CH. 3 MARKETING

2. What is an Economy?  The organized way a nation provides for the needs and wants of its people.  Countries with different economic systems have different approaches when making choices.

3. Economic Resources  All things used in producing goods and services  FACTORS OF PRODUCTION:  LAND – everything contained in the earth or found in the seas  LABOR – all people who work  CAPITAL – money to start and operate a business (includes infrastructure – physical development of the country)  ENTREPRENUERSHIP – skills of people who are willing to invest their time and money to run a business NOTE: SCARCITY forces nations to make economic choices.

4. What, Who, and For Whom?  Nations must answer these 3 basic questions about how to use limited economic resources to get the goods and services the country needs:  What goods and services should be produced?  How should the good and services be produced?  For whom should the goods and services be produced and distributed?

5. Types of Economic Systems (pg. 63)  Traditional Economy – habits, traditions, and rituals answer the basic questions of what, how, and for whom.  Market Economy – no government involvement in economic decisions.  Command Economy – country’s government makes all economic decisions regarding what, how, and for whom goods and services will be produced and distributed.  Mixed Economies – No economy is purely a traditional, market, or command economy. U.S. – Mixed Economy: leaning towards a market economy.

6. Political and Economic Philosophies  All economies are mixed; however, it IS possible to distinguish between them.  CAPITALISM: concerned about its people and cares for those who cannot care for themselves. (Political system most associated – Democracy: U.S.)  COMMUNISM: all people who are able to work are assigned jobs. Little or no economic freedom. (Cuba & North Korea)  SOCIALISM: the government runs key industries and makes economic decisions. (Sweden)

7. Privatization vs. Nationalization  Privatization: Process of governments selling government-owned businesses to private individuals or businesses. This process generates much-needed revenue for the governments involved. Nationalization: when the government takes over a privately-held company. This may be due to an economic crisis.  Example: Cuba nationalized all foreign companies meaning Cuba no longer has companies from other countries that provide goods and services to Cuba.