economic systems what is economics? does it have anything to do with you?
DESCRIPTION
Needs cannot be avoidedTRANSCRIPT
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Economic Systems
WHAT IS ECONOMICS? DOES IT HAVE ANYTHING TO DO WITH YOU?
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Economics
The branch of knowledge concerned with production, consumption, and distribution of wealth.
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Needs cannot be avoided
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Wants
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Basic Problem of Economics
Scarcity: Lack of a particular resource (Usually natural resources) Oil Water Timber Coal
*We Have Unlimited Needs/Wants But Limited Resources
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Questions economies MUST answer
What to produce?
How to produce it?
For whom to produce it for?
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Types of Economic Systems
Traditional EconomyBased on traditions customs, and beliefsGrow and make their own goods. Barter and trade often used to transfer
goods rather than money Almost all goods and services are fully
used by the people who produced them.
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Command Economy
Command EconomyAn economy in which production,
investment, prices, and incomes are determined by the central government.
The former Soviet Union is an example.
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Market Economy
Decisions regarding investment, production, and distribution are based on supply and demand, and prices of goods and services are determined in a free price system.
INDIVIDUALS make all the economic decisions
INDIVIDUALS own the means of production
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Free Markets
Freedom to… CompeteOwn PropertyBuy and Sell Workers to compete for jobsProfits: money a business has left after it has
paid expenses.
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Supply and Demand
Demand Amount of
goods/services consumers are willing and able to buy at various prices.
Buyers demand more when prices are low
Supply Amount of
goods/services producers are willing to sell at various prices.
Businesses will produce more when they can sell for higher prices.
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To increase profit…
Businesses have to find the highest price customers are willing to pay for a good or service.
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Capitalism
Economic System in which the productive resources (farms, factories, machines, etc.) are owned by private citizens.
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The U.S. Economic System
Mixed Economy- We mix elements from different economic systems.
Government regulation of business and enterprise Wage and labor lawsEnvironmental Protection/Regulation
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Monopoly
A company that is the only one selling a product or providing a service.
Disrupts the free market system by eliminating competition.
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American Business
Economics of Scale: The ability of large companies to produce many goods efficiently. Bigger is better. Apple
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Conglomerate- A merger of business that produce, supply, or sell a number of unrelated goods.
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Social Goals of Economic Systems
Economic Efficiency: How well scarce resources are used to produce goods to people for as little cost as possible.
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Economic Equality
What is “fair?” Economic actions and policies have to be evaluated based on what people think is right or wrong. Distribution of income and wealth.Providing equal opportunity
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Economic Freedom
Freedom for consumers o decide to spend or save their money.
Freedom for workers to change jobs and join unions
Freedom of individuals to establish new businesses or close old ones.
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Economic Growth
Increasing production of goods and services over time.
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Economic Security
Refers to protecting consumers, producers, and resource owners from risks that exist in society. What should be protected. Who should be protectedHow do we pay for protection
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Economic Stability
Maintaining stable prices and full employment and keeping growth smooth and steady.
Avoid inflation or deflation of money.
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Broad Social Goals of Economic Systems
Economic Efficiency: How well scarce resources are used to produce goods to people for as little cost as possible.
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Political Cartoon Break!!!
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Berkshire Hathaway
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Homework!
Command vs. Market Economy