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Goal 7 intro


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Goal 7 intro

  1. 1. Goal 7<br />Introduction to Economics<br />
  2. 2. What is Economics?<br />Economics: the study of how people seek to satisfy their needs and wants by making choices<br />
  3. 3. THE FACTORS OFPRODUCTIONGOAL 7: Economics<br />
  4. 4. There are 4 Factors of Production:<br />Land or Natural Resources<br />Capital<br />Labor<br />Entrepreneurship<br />
  5. 5. Land or Natural Resources<br />Materials that are NATURALLY MADE and transformed into something else<br />Examples:<br />Oil<br />Timber<br />Land<br />Crops<br />Natural gas<br />Milk<br />
  6. 6. 2 Types of Natural Resources<br />NON-RENEWABLE<br />Once used, resource is gone<br />Ex: Oil, Natural Gas, Gold <br />RENEWABLE<br />Can be replaced or renewed or recycled<br />ex: wood, water, crops<br />
  7. 7. LABOR<br />PEOPLE who work to produce a good or service<br />Example:<br />Construction worker<br />Teacher<br />Line cook<br />
  8. 8. CAPITAL<br />MAN MADE instruments that assist in making something else<br />Examples:<br />Hammer<br />Robot<br />Book<br />Computer<br />
  9. 9. Human Capital<br />Investment in education or training for a laborer for more productive laborers<br />
  10. 10. Entrepreneurs<br />People who RISK time and money ($) to start their own business<br />Examples:<br />Oprah<br />Ben & Jerry’s<br />Little girl selling Lemonade<br />Donald Trump<br />
  11. 11. Needs v. Wants<br />Need: something people need that is necessary for survival (ex: air, food, shelter) <br />Want: an item we desire but that is not essential to survival <br />
  12. 12. Three Basic Economic Questions<br />What good and services should be produced?<br />Should money go to schools or a new city park??<br />Howshould these goods and services be produced?<br />How much of the product are we going to produce?<br />For whom should these goods and services be produced?<br />After goods and services have been produced, society must determine how goods and services should be distributed among members of society…use a price system in the US<br />
  13. 13. Every CHOICE you make has a…<br />Monetary cost: price you paid for a decision ($)<br />Trade off: ALL of the alternative choices<br />Opportunity cost: the best alternative, your second choice<br />
  14. 14. Scenario #1<br />Dondrick studied for his exam instead of watching American Idol or doing his laundry.<br />
  15. 15. Scenario #2<br />Iesha has decided to go to college instead of getting a full-time job or joining the Navy.<br />
  16. 16. Scenario #3<br />Michael bought a pair of Air Jordans instead of buying his mom a birthday gift or a new jacket for himself. <br />
  17. 17. Productivity<br />
  18. 18. How does an assembly line increase a company’s profits? <br />Divides up the tasks to make a product and allows a worker to specialize in a task to make it faster<br />More product = more profit<br />
  19. 19. Division of Labor<br />Dividing up the tasks required to make a product.<br />
  20. 20. Specialization<br />Giving a worker a specific task to complete<br />Worker becomes a professional in the task<br />
  21. 21. Automation<br />creating a product with the assistance of machinery<br />
  22. 22. Types of Workers<br />Blue Collar:<br />wage-earning workers who wear work clothes ex: mechanics, miners, maids <br />White Collar:<br />office and professional workers who do not wear a uniform. Ex: lawyer, teacher, doctor<br />
  23. 23. Types of Workers<br />Skilled workers:<br />Workers who get special training to do their job, earn more for their education<br />Ex: mechanic, teacher, doctor<br />Unskilled workers:<br />workers do not have any special training that allows them to earn more than a basic wage <br />Ex: fast food employee, cashier<br />
  24. 24. What will happen to a company if they add too many factors of production?<br />Law of diminishing returns<br />At a certain point adding another factor of production will make a company less productive (lose $)<br />Graph<br />What do you think this would look like?<br />
  25. 25. Law of Diminishing Returns<br />The tendency for a continuing effort toward a particular goal to decline in effectiveness after a certain amount of success has been achieved.<br />
  26. 26. Supply and Demand<br />
  27. 27. How can comparative advantage influence what a company or country produces?<br />Comparative advantage: a country, individual, or company can produce a product at a lower cost than a competitor <br />Produce products for less money to make a greater profit<br />
  28. 28. TYPES OF ECONOMIES<br />
  29. 29. 3 Basic Economic Questions<br />What to produce?<br />How to produce?<br />For whom to produce?<br />
  30. 30. Traditional Economy<br />What is produced?<br />Traditional items are produced according to custom<br />How is it produced?<br />According to custom, no specialization or division of labor<br />For whom is it produced?<br />For the local people<br />
  31. 31. Command / Planned Economy<br />What is produced?<br />Gov’t decides what they believe to be best for the whole country. <br />How is it produced?<br />Gov’t owns companies, dictate how to make things. Use specialization and division of labor<br />For whom is it produced?<br />Produce only what is needed for the country <br />
  32. 32. Market Economy<br />What is produced?<br />Whatever sellers want to produce. Supply and demand are the main factors in decision making <br />How is it produced?<br />Competition exists. Business is run for profit. Specialization, division of labor used. <br />For whom is it produced?<br />Produce for whoever will buy in your country and throughout the world<br />
  33. 33. Mixed Economy<br />Most countries have mixed economies. They combine aspects of the 3 economies to make what is best for them. <br />Ex: United States<br />mostly market (individuals buy and sell)<br />Some command (gov’t rules and restrictions) <br />Little traditional (Native American, Amish communities)<br />