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Economics Presentation
 

Economics Presentation

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    Economics Presentation Economics Presentation Presentation Transcript

    • Economics
    • Production, Consumption and Distribution Four Questions all Economic Systems must Address
    • Four Questions All Economic Systems must address… l  What is produced? *Production* Goods and services must satisfy the consumers wants and desires
    • Four Questions All Economic Systems must address… l  HOW should these goods be produced? *Factors of Production* 1.  2.  3.  Capital Land Labor Combine the factors of production to make or produce the goods and services
    • Four Questions All Economic Systems must address… For WHOM are the goods and services produced? *Distribution* Getting the goods and services from producer to consumer l 
    • Four Questions All Economic Systems must address… HOW MANY goods and services should be produced? *Consumption* Make enough to have a large profit and still have consumer demand. How many is determined by supply and demand. l 
    • Supply and Demand
    • Supply and Demand… l  l  l  Scarcity is the inability to satisfy all wants at the same time due to limited resources Choices must be made as to what to produce, how much to produce and who will receive what is produced. PRICE: Mechanism to decide who gets goods and services. The amount that satisfies both producers for profit and consumers for value.
    • Scarcity
    • Choices
    • Price
    • Supply and Demand determine price through their interaction l  DEMAND: is the amount of a good or service that consumers are willing and able to buy at a certain price l  SUPPLY: is the amount of a good or service that producers are willing and able to sell at a certain price.
    • LAW OF SUPPLY : Businesses will provide more products when they can sell them at higher prices LAW OF DEMAND: Buyers will demand more products when they can buy them at lower prices
    • Incentives l  l  l  Incite or motivate Change economic behavior Something that spurs someone into action: sale, coupons, etc.
    • Resources, Scarcity & Opportunity Cost
    • Good l  l  l  l  Anything that can be grown or manufactured (made) Food Clothes Cars
    • Service l  l  l  l  Something a person does for someone else in exchange for money or value. Doctor Hairdresser waiter
    • Resources l  l  l  l  Natural Human Capital Combine to make goods and services
    • Our Basic Economic Problem…
    • People have Unlimited Wants l  l  l  l  l  l  l  Food Clothing Shelter Schools Hospitals Cars Transportation
    • But Resources are Limited l  l  l  l  l  l  l  Land Soil Minerals Fuels People Money Technology
    • Scarcity l  l  The inability to satisfy all wants at the same time; the NEEDS are greater than the RESOURCES
    • Since resources are LIMITED consumers and producers must make CHOICES l  CHOICE: selecting from a set of alternatives l  OPPORTUNITY COST: what is given up when the choice is made.
    • *Scarcity forces us to choose which needs and wants to satisfy with available resources. *Scarcity affects decisions concerning what and how much to produce, how goods and services will be produced and who will get what is produced
    • Production: (sellers) Consumption (buyers) *Combining resources to make goods and services. *Using goods and services *Available resources and consumer preference determine what is produced *Consumer preference and price determine what is purchased
    • SELLER Buyer
    • Economic Systems
    • Command Economy l  l  l  The central government makes decisions and determines how resources will be used. The central government owns property and resources. Businesses are not run for profit. l  l  l  l  l  Businesses are not run for profit. No competition Lack of consumer choice The government sets the prices of goods and services. China, North Korea, Cuba
    • Socialism Allows for wider range of free enterprise along with government-run activities l  3 goals: –  –  –  The equal distribution of wealth & economic opportunity Society’s control, through its government, of all major decisions of production Public ownership of most land, factories, and other means of production. Democratic Socialism – people have basic human rights and elect their political leaders, even though government controls certain industries.
    • Mixed Economy l  l  l  l  l  Most common type of economic system Government and individuals share the decision making process Individuals and businesses make decisions for the private sector Individuals own the means of production Government makes plans for the public sector l  l  l  l  Government guides and regulates production of goods and services offered. A greater government role than in a free market economy Most effective economy for providing goods and services U.S. and most Western European countries are mixed economies
    • Free Market Economy l  l  l  l  Also known as capitalism or free enterprise Private ownership of property and resources (owned by individuals) Individuals and businesses make profits Individuals and businesses compete l  l  l  l  Economic decisions are made by supply and demand Profit is a motivator for productivity No government involvement Consumer sovereignty: buyers determine what is produced
    • Money left over after all business expenses have been paid. COMPETITION PROFIT FREE MARKETS Markets are allowed to operate without undue interference from the government. Money, goods and services flow continuously among individual households, businesses and the government The U.S. economy is a MIXED ECONOMY CONSUMER SOVEREIGNTY Rivalry between businesses for the same customers; results in better quality Individuals can own the means of production & property without undue government interference PRIVATE PROPERTY Consumers determine what goods and services are produced by what they buy