ECONOMICS: The PRODUCTION, DISTRIBUTION, and CONSUMPTION ... ECONOMICS: The PRODUCTION, DISTRIBUTION, and CONSUMPTION of goods and services 1. PRODUCTION: The making of products Example: factories

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ECONOMICS ECONOMICS: The PRODUCTION, DISTRIBUTION, and CONSUMPTION of goods and services 1. PRODUCTION: The making of products Example: factories 2. DISTRIBUTION: The movement of goods or products Example: cargo ships and planes 3. CONSUMPTION: People who buy goods and services Example: you and I buy products from stores Make the Product Move the Product Buy the Product FACTORS of PRODUCTION How Products are MADE. What does it take to make a product? 1. LAND: The natural resources that Earth provides Example: Water, Soil, Minerals, Crops 2. LABOR: Physical or Mental effort used to create goods and service Example: Work! Digging a ditch, plowing a field, teaching a class 3. CAPITAL: Wealth in the form of money or property, used to create more wealth Example: Things you can use to make money! Farmland, a Chicken, a boat for catching fish NAME_____________________________ DISTRIBUTION How Products are MOVED. How do we get products to the people who want them? 1. IMPORT: Products coming into your country from another country Example: Products from China, India, or Mexico 2. EXPORT: Products that move out of your country to another Example: Products we make in America and ship to other countries. Ford Trucks and Computers CONSUMPTION People who buy products and services like you and me. How and why do I buy goods? 1. WANT: Something one desires but is not necessary to live. Example: Xbox one, a new IPod, a fancy Sports car 2. NEED: Something that is necessary to live. A person will die without these. Example: Food, Water, Shelter, Clothing 1. SHORTAGE: Not enough supply of a product or service for all the people that want it. Example: Wal-Mart doesnt have enough IPods for everyone who wants one 2. SURPLUS: When a production or supply is greater than the demand Example: Wal-Mart has more IPods than it can sell LETS START A BUSINESS! 1. Congratulations! The moment you start a business you have become an ENTREPENEUR! ENTREPENEUR: A person who starts, runs and owns a business. 2. Starting a business isnt free! I know that I will have many Expenses when I start my business. EXPENSES: The cost required for something; the money spent on something Examples: paying rent, buying materials for my products, paying my employees 3. How do I pay my employees?? We agree on how much money they make. Called WAGES or SALARY: A fixed or regular payment made by an employer to an employee. 4. Ok, now I have my business all set and ready to open. How do I get customers interested in my products?? I need to give them an INCENTIVE: A reason to do something; motivations Examples: Buy one, get one free!!, 50% off!! 5. Hey! There are other businesses in Holmen that are selling the same product as me! Thats ok, those guys are called. COMPETITION: Individuals or companies striving to sell more products or services than the others Examples: Microsoft vs. Apple, Coke vs. Pepsi 6. If my business is doing well and is making more money than its spending, Im making a PROFIT: Money gained in a business venture; making more money than spent. 7. Oh no! I cant afford to keep my business going; I need to borrow money from the bank. I owe them a DEBT: Money or something of value owed to someone else HOW DOES THE ECONOMY WORK? 1. There are TWO types of businesses in an economy: BASIC BUSINESSES: Businesses that are necessary for a nation to function. Think NEEDS! Examples: electricity, roads, running water NON BASIC BUSINESSES: Business that are nice but not necessary for a nation to function. Think WANTS! Examples: Music, Sports and Designer Clothing 2. What are some things I see every day that are necessary for our country to function?? INFRASTRUCTURE: The basic physical and organizational structures and facilities needed for the operation of society. Examples: Roads, Telephone wire and Power lines, Sewer systems TYPES OF ECONOMIC SYSTEMS There are many kinds of governments throughout the world and they all operate their economies a little differently. Governments own certain businesses in an economy. 1. CAPITALISM or Free Market Economy An economic system where both basic and non-basic businesses are privately owned 2. SOCIALISM or Mixed Economy An economic system where government owns the basic businesses and the non-basic businesses are privately owned 3. COMMUNISM or Command Economy An economic system where both the basic and non-basic businesses are owned by the government

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