economics mktg
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- 1. What is an Economy?
Chapter 3.1 - 2. Economic Systems
Economy: the organized way a nation provides for the needs and wants of its people
A countys resources determine economic activities such as
Manufacturing
Buying
Selling
Transporting
Investing - 3. Resources
Are all the things used in producing goods and services
Economists call these Factors of Production
4 categories
Land (tangible)
Capital (tangible)
Labor (intangible)
Entrepreneurship (intangible) - 4. Land
Everything contained in the earth or found in the seas
Coal, crude oil, lakes, trees, plants, soil etc. - 5. Capital
Money to start and operate a business
Also goods used in production
Factories
Office buildings
Computers
Tools
Lumber (processed raw materials
Steel
Includes infrastructure
Physical development of countries
Roads
Ports
Sanitation facilities
Telecommunications - 6. Labor
All the people who work (full & part-time)
Economies with well-educated and well-trained labor have an advantage - 7. Entrepreneurship
Skills of people who invest their time and money to run a business
Organize factors of production to create goods and services
Employers of a population - 8. Scarcity
Different economies have different amounts of resources
Limited resources
Unlimited wants and needs
Scarcity forces nations to make economic choices - 9. How Does an Economy Work?
Three Basic Questions nations must ask:
Which goods and services should be produced?
How should goods and services be produced?
For whom should the goods and services be produced?
Answers define their economic system - 10. Economic Systems: 3 Categories
Traditional Economy
Market Economy
Command Economy - 11. Traditional Economy
Traditions & rituals answer economic ?s
Based on cultural or religious practices
Passed from one generation to next
Activities assigned through tradition rather than choice - 12. Market Economy
In pure market economy there is no government involvement in economic decisions
Consumers decide what should be produced
Businesses decided how to produce goods and services - 13. Command Economy
Govtdecides what, when and how much will be produced and distributed
Govt controls factors of production - 14. So what type of economy do we have?
Traditional?
Market?
Command? - 15. Mixed Economies
No economy is purely traditional, market, or command
US = mixed economy leaning toward market economy (we have govt involvement)
3 political philosophies have shaped world economies:
Capitalism
Socialism
Communism - 16. Capitalism
Political & economic philosophy characterized by marketplace competition and private ownership of businesses
Same as free enterprise
Political foundation is usually Democracy
power in the hands of the people
Multiple political parties
Ex. US, Japan - 17. Communism
Is a social, political, and economic philosophy
Govt is authoritarian- controls factors of production
No private ownership of property or capital
goods owned in common theory where govt is representing the community as a whole
Little or no economic freedom
Ex. Cuba, North Korea - 18. Socialism
Originally referred to a system on its way to communist ideal of classless society
Today most socialist countries are democracies
More govt involvement than Capitalist nations runs key industries, makes decisions
Have more social services
Businesses & individuals pay higher taxes
Ex. Canada, Germany
