DO YOU BELLWORK AND PAY YOUR WEDNESDAY AND FRIDAY BILLS IN FREYONOMY

FREYONOMY BUYING OPPORTUNITIES Phone upgrade $200

FREYONOMY BUYING OPPORTUNITIES Buying fabulous new jacket, $300

FREYONOMY BUYING OPPORTUNITIES Rock climbing/ spelunking trip $150

FREYONOMY BUYING OPPORTUNITIES Sky diving $150

FREYONOMY BUYING OPPORTUNITIES Horseback riding adventure $75 2 hour trip. Includes tip and gas.

FREYONOMY BUYING OPPORTUNITIES Going to see a local band $20

THE LAST FEW ECONOMIC CONCEPTS

Standard 1

CHALLENGE QUESTION #1 Why do you think property rights are

essential to the functioning of a market economy?

PRIVATE PROPERTY RIGHTSProperty rights- rights of individuals and

groups to own resources and businesses.

Why are they essential to a market economy???

They give producers ______ to create G/SIncentive

They give buyers ________ to purchase G/STrust

MIXED ECONOMY Mixed Economy- reflects characteristics

of both market and command economies

Ex. USM- Businesses can employ whoever they

wishM- Producers can produce whatever they

wishC- Libraries, Education, Postal Service is run

by the governmentC- Programs such as social security provide

for those who are too old to work

GLOBAL ECONOMY Global Economy- Economic interaction

that cross international borders

Ex. US trade with China

CHALLENGE QUESTION #2 In this country, most people work together in family groups

and go fishing and hunting to get the food they need to survive. The government does not direct these families. However, the government owns several coal mines. It decides how much coal to produce, how much to sell to foreign governments, and how much to keep to run the power plants it owns. The government is considering developing a state-run fish cannery and having citizens work in the factory to add to government revenues.

Traditional economy_______________________________ Command economy

CHALLENGE QUESTION #3 The government in this country provides free public

education through high school for everyone. It also runs a university system that competes with private colleges. Most of the land and all industries are owned by individuals or companies. The government also provides public goods and services such as interstates, the military, and medical insurance for the elderly.

Market economy___________________________________ Command economy

PRIVATIZE Privatize- To change an industry or

business from government control to private ownership

Ex. Getting rid of the US Postal Service and only having Fedex and UPS

NATIONALIZE Nationalize- to convert from private to

government ownership

Ex. 2001: In response to the September 11 attacks, the then-private airport security industry was nationalized and put under the authority of the Transportation Security Administration.

CHALLENGE QUESTION #4 Would a country that is converting from

a market economy to a command economy want to privatize or nationalize industries? Why?

CIRCULAR FLOW MODELProduct Market

(where you purchase G/S, mall, dentist

office)

Factor Market

(where businesses buy the factors of production; land,

labor, capital, entrepreneurship

Households

Businesses

$ income

$ consumer spending

$ business revenue

$ payments for labor

and resources

Resources sold (labor,

land)

Resources bought by businesses

Sell goods & services

Households buy

goods & services

Circular Flow Model- shows the flow of money, products, and resources that takes place in a market economy.

CIRCULAR FLOW MODEL

Circular Flow Model- shows the flow of money, products, and resources that takes place in a market economy.

The flow of ____________money

and __________ in the economy is circular!!!!!!resources

Who are the main decision makers in a circular flow model? Businesses and households