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Unit Two Economic Systems
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From far away, a galaxy looks like a big, solid white blob.
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However, when you get close up, you see that in fact a galaxy is a conglomeration of billions of individual points of light.
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We always refer to an economy as if it were one big thing.
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However, like a galaxy, an economy is really a conglomeration of millions of individual markets.
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I. A market is any place or situation where there is a voluntary exchange of goods or services. Markets can take many forms!
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A. In order for a market driven economy to work, there are certain vital aspects, or pillars, which must be present.
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The Nun Bun: How get it back?
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1.Incentives and profit motive: without them, absolutely nothing gets done. More examples?
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Cash for Clunkers=$5000 for old cars! Grades! Kroger Mastercard!
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2. Private property: If it’s ours, we work harder and smarter, like Jeff Ellis!
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3. Price system: Prices determined by supply and demand, not the government. How much is something worth ?
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Only as much as someone is willing to pay! $550,000!
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4. Competition: Who benefits and how?
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Honda Element
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Scion xB
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Kia Soul
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Chevy Box
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Competition leads to lower prices, better quality, and innovation!
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The Justice Department filed suit Wednesday to block AT&T's $39 billion deal to buy T-Mobile USA
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…on grounds that it would raise prices for consumers. -The Tennessean, 8/31/11
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Competition is so important that it is protected by law. Monopolies are forbidden by anti-trust laws.
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Evil Standard Oil Trust
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Standard Oil was broken into these.
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5. Entrepreneurial freedom! Conditions must be conducive for entrepreneurs to do their thing so they can give us…
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Obama action figure! Skittles! Etc.
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Low taxes, access to bankruptcy protection, less government regulation help entrepreneurs.
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View clip from Food, Inc. What final pillar is illustrated by this clip?
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One never knows what consumers will embrace.
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Embrace indeed…
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If we do buy it…
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…imitators arise!
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If we don’t buy it, it disappears.
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6. Consumer sovereignty: the consumer is king/queen of the economy!
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Choose three of the market pillars, and then explain how each causes pizza to get to your house faster than an ambulance.
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