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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