Economics mktg

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Economics mktg

  1. 1. What is an Economy?<br />Chapter 3.1<br />
  2. 2. Economic Systems<br />Economy: the organized way a nation provides for the needs and wants of its people<br />A county’s resources determine economic activities such as <br />Manufacturing<br />Buying<br />Selling<br />Transporting<br />Investing<br />
  3. 3. Resources<br />Are all the things used in producing goods and services<br />Economists call these “Factors of Production”<br />4 categories<br />Land (tangible)<br />Capital (tangible)<br />Labor (intangible)<br />Entrepreneurship (intangible)<br />
  4. 4. Land<br />Everything contained in the earth or found in the seas<br />Coal, crude oil, lakes, trees, plants, soil etc.<br />
  5. 5. Capital<br />Money to start and operate a business<br />Also goods used in production <br />Factories<br />Office buildings<br />Computers<br />Tools<br />Lumber (processed raw materials<br />Steel<br />Includes infrastructure<br />Physical development of countries<br />Roads<br />Ports<br />Sanitation facilities<br />Telecommunications<br />
  6. 6. Labor<br />All the people who work (full & part-time)<br />Economies with well-educated and well-trained labor have an advantage<br />
  7. 7. Entrepreneurship<br />Skills of people who invest their time and money to run a business<br />Organize factors of production to create goods and services<br />Employers of a population<br />
  8. 8. Scarcity<br />Different economies have different amounts of resources<br />Limited resources<br />Unlimited wants and needs<br />Scarcity forces nations to make economic choices<br />
  9. 9. How Does an Economy Work?<br />Three Basic Questions nations must ask:<br />Which goods and services should be produced?<br />How should goods and services be produced?<br />For whom should the goods and services be produced?<br />Answers define their economic system<br />
  10. 10. Economic Systems: 3 Categories<br />Traditional Economy<br />Market Economy<br />Command Economy<br />
  11. 11. Traditional Economy<br />Traditions & rituals answer economic ?’s<br />Based on cultural or religious practices<br />Passed from one generation to next<br />Activities assigned through tradition rather than choice<br />
  12. 12. Market Economy<br />In pure market economy there is no government involvement in economic decisions<br />Consumers decide what should be produced <br />Businesses decided how to produce goods and services<br />
  13. 13. Command Economy<br />Gov’tdecides what, when and how much will be produced and distributed<br />Gov’t controls factors of production<br />
  14. 14. So what type of economy do we have?<br />Traditional?<br />Market?<br />Command?<br />
  15. 15. Mixed Economies<br />No economy is purely traditional, market, or command<br />US = mixed economy leaning toward market economy (we have gov’t involvement)<br />3 political philosophies have shaped world economies: <br />Capitalism<br />Socialism<br />Communism<br />
  16. 16. Capitalism<br />Political & economic philosophy characterized by marketplace competition and private ownership of businesses<br />Same as “free enterprise”<br />Political foundation is usually Democracy<br />power in the hands of the people<br />Multiple political parties<br />Ex. US, Japan<br />
  17. 17. Communism<br />Is a social, political, and economic philosophy<br />Gov’t is authoritarian- controls factors of production<br />No private ownership of property or capital<br />“goods owned in common” theory where gov’t is representing the community as a whole<br />Little or no economic freedom<br />Ex. Cuba, North Korea<br />
  18. 18. Socialism<br />Originally referred to a system on its way to communist ideal of classless society<br />Today most socialist countries are democracies<br />More gov’t involvement than Capitalist nations – runs key industries, makes decisions<br />Have more social services <br />Businesses & individuals pay higher taxes<br />Ex. Canada, Germany<br />

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