economics is the study of why people make one choice rather than another when buying and selling,...
TRANSCRIPT
INTRODUCTION TO ECONOMICS
WHAT IS ECONOMICS?
Economics is the study of why people make one choice rather than another when buying and selling, spending and saving
QUESTIONS WE WILL ANSWER…
What are goods and services? What are economic resources? Why must we make economic choices? What is the cost of every choice?
GOODS AND SERVICES Goods are things that can be
seen or touched Like ipods, shoes, bicycles
Services are useful work that cannot be seen or touched The person who sells you the
ipod is performing a service Doctors, lawyers, hair stylists
PRODUCERS AND CONSUMERS
Goods and services must be made or produced
Businesses offer goods and services for sale
Business owners, managers, workers who make ipods or cut your hair are Producers They are producing services and products
The users of the goods and services are consumers
ECONOMIC RESOURCES
Things that go into the making of goods and services
3 KINDS OF ECONOMIC RESOURCES
Natural Resources Human Resources Capital Resources
NATURAL RESOURCES
Things provided by the world around us Water Minerals like iron and gold Coal Gas Natural resources appear plentiful, but
there is a limited supply
HUMAN RESOURCES
The people who put things together to make goods and services The producers
How much a nation produces depends on the abilities of the people
CAPITAL RESOURCES
Machines, tools, buildings used in the production of goods and services are the capital resources
A nation’s wealth is measured in terms of the capital it possesses
WHY MAKE ECONOMIC CHOICES?
Scarcity Scarcity means that there is not
enough of everything to go around Consumers want more goods and
services than we can produce ALL types of resources are LIMITED Therefore, we must decide how best to
use those resources
WHAT IS AN ECONOMIC SYSTEM?
The way a group or nation organizes itself for production
Three general types of systems
3 QUESTIONS EACH SYSTEM MUST ANSWER
What goods and services shall be produced?
How shall the goods and services be produced?
Who will receive the goods and services that are produced?
TRADITIONAL ECONOMIC SYSTEM
One in which people’s economic roles are the same as those of their parents and grandparents
Tradition decides what these people do for a living
MARKET ECONOMIC SYSTEM
One in which a nation’s economic decisions are the result of individual decisions by buyers and sellers
You choose what you want to do i.e. open a business, go to college
The prices you charge are influenced by the prices charged by you competitors
COMMAND ECONOMIC SYSTEM
The main decision maker in this type of system is the government
No person independently decides to open or run any kind of business
The government decides what you do, what products and services are produced
QUESTION
Which type of market does the US have?
Market Economy
MEANS OF PRODUCTION
An economy’s means of production are its capital: factories, farms, shops, machinery
COMMUNISM
Public Ownership of Means of Production
Government owns and operates means of production
Soviet Union, China
SOCIALISM
When government owns and operates railways, banks, airlines, and power plants, but allows individuals to own other businesses
Decisions by consumers, businesses and government determine economic activity
Sweden
CAPITALISM
Where most stores, farms, and factories are owned and operated by individuals and businesses
Free enterprise United States
MIXED ECONOMIES
No country has an economic system that is 100% communism, socialism, or capitalism
All countries have a mixed economy with some free enterprise and some government ownership