1. The Industrial Revolution Economics

2.  Describes how people meet their needs

3. Economics  People have unlimited wants – things that they would like to have or to do  These wants can never be fully satisfied

4. Economics  Limited Resources – we only have so much time, energy, and resources to satisfy our needs and wants

5. Economics  Three Economic Questions 1. What should be produced? 2. How should it be produced? 3. Who should get it?

6. Free Enterprise System  Economic Freedom – the freedom to make their own choices in deciding what to buy, where to work, and what to make

7. Free Enterprise System  People have the right to own property – such as possessions, homes, factories, farms, businesses – and to use their property as they see fit

8. Free Enterprise System  People invest money or time to produce and sell goods and services in hopes to make a profit

9. Free Enterprise System  Different producers often make the same goods or promote the same services

10. Free Enterprise System  Gives consumers a choice in the type of goods available and how much they want to pay  Forces producers to attract consumers by  Improving quality  Reducing prices

11. Free Enterprise System  Government interference is limited  Laissez-faire: “hands off” government  The three basic economic questions are answered by the producers and consumers

12. Adam Smith  Scottish professor  Wrote The Wealth of Nations, 1776  First to explain how the free enterprise system works and the law of supply and demand  “Invisible Hand”  Guides individual actions so that they actually work for the common good

13. The Law of Supply and Demand  Supply – how much of a good producers make available  Demand – how much of a product consumers are willing to buy

14. The Interaction of Supply and Demand PRICES Low Demand/ Large Supply High Demand/ Short Supply PRICES

15. Free Enterprise System  Flourished in Britain  Played an important role in the Industrial Revolution  Allowed investors and business owners to put their resources where they had the greatest benefit for the economy