Europe Unit 3

Economics and Environmental Understandings

StandardsSS6E5 The student will analyze different economic systemsA. Compare how traditional, command, and market economies answer the economic questions of 1. what to produce, 2. how to produce, 3. who to produce for

B. Explain how most countries have a mixed economy located on a continuum between pure mixed and pure command

C. Compare the basic types of economic systems found in the United Kingdom, Germany, and Russia

VOCABULARY!Understanding the vocabulary in this unit is VERY important. We will be using many words you may not have ever heard

before. In order to understand our lessons, you must first

understand the vocabulary.

EconomicsThe study of how resources

are managed in the production, exchange, and use of goods and services

What are the ‘Three Economic

Questions?’1. What will be produced?2. How will it be produce?

3. For whom will it be produced?

GoodAny object you can buy to satisfy a want. (It has to be tangible, meaning it exists

physically – you can touch it)

Service

An action you can pay for (buy) to meet a want. (Like paying somebody else to rake the

leaves on your lawn)

Supply and Demand

An economic condition that states that the price of a good rises or falls depending on how many people want it (demand) and depending on how much of the good is available (supply)

Scarcity

A word in economics used to describe the conflict between people’s desires (wants) and limited resources. (There will

never be enough of anything to meet all people’s every want)

Factors of Production

One of the elements needed for production of goods or

services.

Natural Resources

Raw materials used to make goods. Examples include land, water, forests, minerals, soil,

and climate.

Labor Resources

Workers needed with the appropriate knowledge, skills, and experience to make goods

or provide services

Capital Resources

Machines, factories, and supplies needed to produce

good ands services

Entrepreneur

The people who bring natural resources, labor resources, and

capital resources together to produce goods and services

Economy

The system by which business owners in a region use productive resources to

provide goods and services that satisfy people’s wants.

Traditional Economy

An economic system in which social roles and culture

determine how goods are made, sold, and bought.

Command Economy

An economic system in which the government decides what goods will be produced, how

they will be produce, and how they will be distributed

Market Economy

An economic system that allows business owners to

compete in the market with little to no government

interference.

Mixed Economy

An economic system that has features of traditional, command, and market

systems.

GDP (Gross Domestic Product)

The total value of the goods and services produced in a country in a given period of

time (usually a year)

GDP Per CapitaThe total value of the goods and

services produced in a country in a given period of time (usually a year), divided by that country’s population: suppose to be how much value was produced per

person

Human Capital

The knowledge and skills that allow workers to produce

goods and services and earn an income.

Consumer

A person who buys and uses goods or services

Export

A product traded with or sold to another country

Import

A product brought into a country through trade or sale

Trade Barrier

A geographic (or government created) feature that prevents

or slows trade.

Tariffs

A fee (tax) placed on imported or exported goods by a

country’s government in order to limit trade.

QuotasRestrictions on the amount, or number, of a good that may be imported into a country. (This is done to cause that good to be more expensive and thus

encourage people to purchase products made in their own

country)

Embargos

A type of trade barrier in which a government places

restrictions on the import or export of certain goods.

Embargos are often backed by military force.