1. Copyright © Texas Education Agency, 2012. All Rights Reserved.

2. 2 “Copyright and Terms of Service” Copyright © Texas Education Agency. The materials found on this website are copyrighted © and trademarked ™ as the property of the Texas Education Agency and may not be reproduced without the express written permission of the Texas Education Agency, except under the following conditions: 1)Texas public school districts, charter schools, and Education Service Centers may reproduce and use copies of the Materials and Related Materials for the districts’ and schools’ educational use without obtaining permission from the Texas Education Agency; 2) Residents of the state of Texas may reproduce and use copies of the Materials and Related Materials for individual personal use only without obtaining written permission of the Texas Education Agency; 3) Any portion reproduced must be reproduced in its entirety and remain unedited, unaltered and unchanged in any way; 4) No monetary charge can be made for the reproduced materials or any document containing them; however, a reasonable charge to cover only the cost of reproduction and distribution may be charged. Private entities or persons located in Texas that are not Texas public school districts or Texas charter schools or any entity, whether public or private, educational or non-educational, located outside the state of Texas MUST obtain written approval from the Texas Education Agency and will be required to enter into a license agreement that may involve the payment of a licensing fee or a royalty fee.

3.  Economy – The organized way a nation provides for the needs and wants of its people.  Resources – All the things used in producing goods and services.  Productivity – Output per worker hour that is measured over a defined period of time.  Factors of Production – Comprise four categories; Land, labor, capital, and entrepreneurship.  Value – Refers to a perception by consumers that a product provides satisfaction beyond the cost incurred to obtain that brand.  Traditional Economy – Traditions and rituals that answer the basic questions of what, how, and for whom.  Market Economy – No government involvement in economic decisions.  Command Economy – A system in which a country’s government makes economic decisions and decides what, when, and how much will be produced and distributed.  Gross Domestic Product (GDP) – The output of goods and services produced by labor and property located within a country.  Gross National Product (GNP) – The total dollar value of goods and services produced by a nation. Copyright © Texas Education Agency, 2012. All Rights Reserved. 3

4.  Production  Management  Finance Copyright © Texas Education Agency, 2012. All Rights Reserved. 4

5.  Land – Includes everything contained in the earth or found in the seas.  Labor – Refers to all the people who work.  Capital – Includes money to start and operate a business.  Entrepreneurship – Refers to people who will invest their time and money to run their own business. Copyright © Texas Education Agency, 2012. All Rights Reserved. 5

6.  Nations must ask three basic questions when deciding on how to use resources:  1. What goods and services should be produced?  2. How should the goods and services be produced?  3. For whom should the goods and services be produced? Copyright © Texas Education Agency, 2012. All Rights Reserved. 6

7.  In this economy, the three questions are asked, and the answers are often based on cultural or religious practices and ideals.  These traditions have been passed on from generation to generation without much change.  There is little choice as to what is produced.  Tradition regulates who buys and sells products. Copyright © Texas Education Agency, 2012. All Rights Reserved. 7

8.  In this economy, there is no government involvement in the decision making process as to what products are produced.  The consumers decide what should be produced and where.  Businesses decide how to produce good and services.  Whom – The people with the most money are able to buy goods and services. This motivates people to work. Copyright © Texas Education Agency, 2012. All Rights Reserved. 8

9.  In this economy, the government makes economic decisions and decides what, when, and how much will be produced.  The government controls the factors of production and asks the three questions.  The government decides who.  The government decides how.  The government decides where. Copyright © Texas Education Agency, 2012. All Rights Reserved. 9

10.  Advertising is related to the GDP in that it can contribute to levels of overall consumer demand when it plays a key role in introducing new products.  Each economy conducts advertising in its own way. What constitutes ethical advertising is highly subjective.  Advertising is to some extent persuasive in nature, drawing an ethical guideline between what is good rhetoric and what is misleading can be difficult. Copyright © Texas Education Agency, 2012. All Rights Reserved. 10