ECONOMICS - DAY 2

Introduction to Business & Marketing

REVIEW What is Economy? What are Resources? What are Factors of Production?

Land Labor Capital Entrepreneurship

ACTIVITYIdentify each of the following with appropriate Factor

of Production: land, labor, capital, entrepreneurship

1. You plan to make and sell custom skateboards.

2. Both you and your friend have part-time jobs at a woodworking factory.

3. You will decorate the boards by using dried leaves.

4. You have been able to buy materials for 15 boards.

ACTIVITY ANSWERSIdentify each of the following with appropriate Factor of

Production: land, labor, capital, entrepreneurship

1. You plan to make and sell custom skateboards.

- entrepreneurship

2. Both you and your friend have part-time jobs at a woodworking factory.

- labor

3. You will decorate the boards by using dried leaves.

- land

4. You have been able to buy materials for 15 boards.

- capital

HOW DOES AN ECONOMY WORK

There are three fundamental economic questions:

1. What goods & services should be produced?2. How should goods & services be produced?3. For who should goods & services be produced?

TYPES OF ECONOMIES Market Economy – no government

involvement

Command Economy – government makes all decisions

Mixed Economy – combination of Market and Command

MARKET ECONOMY There is no government involvement in

economic decisions WHAT: consumers decide what to produce

goods & services HOW: businesses decided how to produce

goods & services FOR WHOM: the people with more money

are able to buy more goods & services

COMMAND ECONOMY

Government has complete involvement in economic decisions

WHAT: one person (dictator) decides what to produce goods & services

HOW: the government owns ALL means of production and runs all businesses

FOR WHOM: the government decides who receives goods & services

MIXED ECONOMY

Combination of Market & Command economy USA is a Mixed Economy

WHAT: the people & government decide together what to produce goods & services

HOW: the people & government decide together how to produce goods & services

FOR WHOM: the people & government decide together who receives the goods & services

HOW TO MEASURE AN ECONOMY?

Economic indicators that measure an economy: Productivity: output per worker hour measured

over period of time Gross Domestic Product (GDP): output of goods &

services produced by labor Standard of Living: level of material comfort in

terms of products available to a group of people Consumer Price Index (CPI): measures change in

price over a time period Consumer Confidence: degree of optimism that

consumers feel about the overall state of the economy

Unemployment Rate: percentage of workforce that is unemployed at any given date

WHAT MAKES A HEALTHY ECONOMY?

The characteristics of a healthy economy are: high productivity stable prices low unemployment

VOCABULARY NOTEBOOK

Vocabulary Terms:1. Economy2. Resources3. Factors of production (list all 4)4. Land5. Labor6. Capital7. Entrepreneurship8. Market economy9. Command economy10. Mixed economy

VOCAB TERM DEFINITION PHOTO

1. Economy the organized way a nation provides for the needs and wants of its people

You will draw a photo of

something that helps you remember this term – keep

it simple!