CHAPTER 6TO WHAT EXTENT DO

DIFFERENT ECONOMIC SYSTEMS AFFECT QUALITY OF

LIFE?

Terms to Know

Definitions work sheet

Just Imagine…

You are in charge of all the money coming into your home every month

What factors would you have to consider in deciding how to spend that money?

Everybody in you house will have different ideas on what's important and what it should be spent on That’s economics

A comparison

We will looking at the economic systems of Canada and its largest trading partner, the United States

What values shape these systems, how they are different, and how they are the same

A brief lesson in economics…

Cartoon, pg 199 Why didn’t the manufacturer make more

games? Why did the truckers go on strike? Why did the store decide to sell the game

for less? Why would anyone buy it for $99.99?

What Values shape the mixed and market economies of

Canada and the United States?

The demand for super cyborg city was so great it created a scarcity of the product To many people wanted the product, and not enough

copies were available Some things people need are unlimited- ex air Most things that people need or want are

limited. This is because resources are limited In economics resources include, money,

labour, and materials

What Creates Scarcity?

Land Materials found in the natural environment

needed to produce goods and services, such as renewable and non-renewable resources What impacts might this decision about using

the land have on the land?

Labour Labour consists of the physical and mental

effort needed to produce goods and services Construction workers building a house- if there

aren’t enough workers , fewer houses get built

How do choices concerning jobs effect the work force?

Capital Consists of money that people own or borrow, used

to purchase equipment, tools, and other resources needed to produce goods and services

Ex- setting up a plane production plant requires money

What if the capital that built this airplane were invested in something else? How might this impact airports and air services?

Jungle or Zoo?

Get into 4 teams Each team will choose whether they

would prefer to live in a jungle or a zoo. Make sure you write your decision at the top of the page.

Answer the questions from that perspective.

Who would rather live in a jungle? Who would choose the zoo? Explain your answers.

What are the most important reasons for your personal choices? What values or beliefs emerge in these answers?

Can you think of countries that could be compared to jungles or zoos?

What does the country you have chosen have in common with the jungle or zoo?

Speculate on: – the living conditions – the type of government – the economic activities – the individual happiness and collective well-

being. What are the drawbacks to living in the environment

you initially chose?

Economic Systems

An economic system is a way to solve the basic problem of scarcity.

Economic systems can be placed on a spectrum; their spot on that spectrum depends on the underlying values of that society

Spectrum of Economic Systems

More government control Less government control

Planned Economy

At this end of the spectrum, the government makes all the decisions about how to solve scarcity.

The Government owns and manages all the resources needed to produce things Resources are publicly owned Government makes all decisions about

resources Individual consumers have little influence on

decision making Ex. Former USSR

Market Economy

On this end of the spectrum, the choices of individuals solve scarcity

Private businesses manage and sell their own resources

Businesses succeed if they sell products consumers want, otherwise they fail

The government does not get involved Ex. The United States

Mixed Economy

Combines private ownership and government control

Individuals and government make decisions about what to produce

The level of government involvement depends on what political party is in power Liberal Party-More involvement Conservative Party-Less involvement

Ex- Canada, Sweden

How did they end up this way?

The Canadian and American economic systems are very similar, but they developed from different starting points Their starting points involved different

answers to the fundamental question “what’s the best way to achieve the public good?”

The Public Good and Cooperation The belief that individuals must consider each

other and set aside their individual differences to achieve what’s best for society What style of economic system do you think this

idea fits? The Public Good and individualism

the belief that what's best for each person individually adds up to what best for society What style of economic system do you think this

idea fits?

History of the Different Systems

Canadian Economy pg 206-207 How might the history of Canada shape

the value and attitudes in Canada? The U.S. Economy pg 208 How might the history of the U.S. shape

the values and attitudes in the U.S.? Video- VHS Capitalism vs. communism Public Good Worksheets

Supply and Demand

Supply and demand control the market system through a cause-and-effect relationship related to price.

Supply and demand effect quality of life because they affect the prices of products we buy, the availability of products, and jobs connected to creating products. Supply and Demand Activity

Demand

Demand is the quantity of a good that consumers will buy. The demand for the good is related to the price of that good.

Generally, the higher the price of a good, the less people will want to buy and therefore, the lower the demand. When something is expensive, people will purchase less of it or a substitute.

The opposite is also true: the lower the price of a good, the more people will want to buy and the higher the demand will be. When something is cheap, people will want to buy more of it.

Supply

Supply is the quantity of a good that producers are willing to make and offer for sale in the market. The supply of a good is related to the price of that good.

Generally, the higher the price of the good, the more producers will want to make and the greater the supply.

The opposite is also true: the lower the price of a good, the less producers will want to make and the lower the supply will be.

Competition

Competition is about striving to get consumers to buy their products

Producers attract consumers in a variety of ways-price, product quality, and advertising

Many factors can affect competition, including the value of consumers and decisions by the government to get involved in decisions about supply and demand Ex: coke vs. Pepsi, ford vs. GMC, Nike, vs.

Adidas 2 Donut shops case study- pg 212

Prices

Prices in a free market system are determined by the interaction of supply and demand.

The price of a good will naturally move to a level where the quantity demanded is EQUAL to the quantity supplied. At this point, the market is said to be at EQUILIBRIUM.

In a free market system, the equilibrium price and quantity of most goods are constantly changing as the market adjusts automatically to changes in the level of supply and demand.

Lemonade

Prices

Firms are encouraged to increase production of those goods that are in high demand and to reduce production of less popular goods

Goods are made available to consumers at the lowest possible price Ford Motor company grew because of their

ability to supply cars to the consumers for a lower price due to the invention of the assembly line

Why do Governments get Involved in the Market Economy?

Market economies rely on the decisions of individuals consumers and producers

Sometimes the government may get involved to inform, protect or ensure good and fair practices Ex. The B.C. government started its own auto

insurance program because it believed private insurance companies were to expensive

Can you think of any other reasons why the government may get involved?

The Business Cycle

The free market economy does not grow at a constant rate. Instead, it goes through a continuing series of “boom” and “bust” periods called the business cycle.

Boom Periods

period of prosperity and economic growth

high level of employment wages and profits rise, therefore

spending increases GDP (gross domestic product) is high Problem: INFLATION

Bust Periods

Economic decline and crisis production decreases, therefore

unemployment rises and wages fall consumers restrict spending, therefore

prices and profits drop RECESSION – mild and short lived

downturn DEPRESSION – longer and severe period

of decline

The Business Cycle

Government Intervention

Governments intervene in the economy by changing their level of spending and the supply of money to try to even out the boom and bust cycles

Look at the examples on pg 214 and 215 To what extent do you agree or disagree

with the involvement of the government in each example?

Entrepreneurs

Entrepreneur – a person who ORGANIZES a business and takes the RISKS associated with competing in a market economy They are the heart of the market system

The following are clips from CBC television’s reality show Dragon’s Den: Dragon's Den Dragon's Den 2

Case Study

Read the case studies on Page 226 and 229 and answer the questions

Supply, Demand, and Price

Break into 3 groups 1) Supply 2) Demand 3) Price

I will read some “what if “ Statements. You as a group must decide what will happen Will the supply/demand/price go up? Will the supply/demand/price go down?