Economics Principles


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Economics Principles

  1. 1. Economic Principles From: GA Ag Ed Curriculum Office To accompany the Georgia Agriculture Education Curriculum Lesson 03452-8 July 2002
  2. 2. Objectives <ul><li>Define economics and explain economic systems </li></ul><ul><li>Describe free enterprise </li></ul><ul><li>List and explain 3 ways of doing business </li></ul><ul><li>Explain entrepreneurship </li></ul>
  3. 3. Questions: Headings and Subheadings <ul><li>What is economics? </li></ul><ul><li>Define and describe supply and demand. </li></ul><ul><li>How does price effect economics? </li></ul><ul><li>What importance does money play in economics? </li></ul><ul><li>Explain the economic system. </li></ul><ul><li>Explain free enterprise. </li></ul><ul><li>Describe business ownership. </li></ul>
  4. 4. Questions cont <ul><li>What choices are available in a free enterprise system? </li></ul><ul><li>What kind of control issues are present in free enterprise? </li></ul><ul><li>List 3 ways of doing business. </li></ul><ul><li>Describe sole proprietorship. </li></ul><ul><li>Describe partnerships. </li></ul><ul><li>What is a corporation? </li></ul>
  5. 5. Questions cont <ul><li>How do consumers affect competition? </li></ul><ul><li>Who are consumers? </li></ul><ul><li>Define Entrepreneurship? </li></ul>
  6. 6. Terms <ul><li>business </li></ul><ul><li>competition </li></ul><ul><li>consumer </li></ul><ul><li>cooperative </li></ul><ul><li>corporation </li></ul><ul><li>demand </li></ul><ul><li>dividend </li></ul><ul><li>economic system </li></ul><ul><li>economics </li></ul><ul><li>entrepreneurship </li></ul><ul><li>free enterprise </li></ul><ul><li>money </li></ul><ul><li>monopoly </li></ul><ul><li>partnership </li></ul><ul><li>price </li></ul><ul><li>private ownership </li></ul><ul><li>property </li></ul><ul><li>risk </li></ul><ul><li>sole proprietorship </li></ul><ul><li>supply </li></ul>
  7. 7. What is Economics? <ul><li>The study of how people get what they want </li></ul><ul><li>Includes producing goods and services and getting them to people </li></ul><ul><li>Money and resources are scarce </li></ul><ul><li>Governments have systems to care for people </li></ul><ul><li>Work is required to produce and make money </li></ul><ul><li>Includes supply, demand, prices & money </li></ul>
  8. 8. Supply & Demand <ul><li>Prices vary with supply of something as related to demand for it </li></ul><ul><li>Supply and demand work together in setting price </li></ul><ul><li>Both are limited </li></ul><ul><li>supply  , demand  </li></ul><ul><li>supply  , demand  </li></ul>
  9. 9. Supply versus Demand <ul><li>Supply </li></ul><ul><ul><li>Amount of something that is available </li></ul></ul><ul><ul><li>Can be reduced by disasters </li></ul></ul><ul><ul><li>Supply  , Price  </li></ul></ul><ul><li>Demand </li></ul><ul><ul><li>Amount of something that will be bought at a given price </li></ul></ul><ul><ul><li>Price  , Demand  </li></ul></ul><ul><ul><li>Price must cover costs of production </li></ul></ul>
  10. 10. Graph Plotting <ul><li>Price  , Demand  , Supply  </li></ul><ul><li>Price  , Demand  , Supply  </li></ul>
  11. 11. How Price Affects Economics <ul><li>Price is the amount of money involved in buying and selling a good or service </li></ul><ul><ul><li>Worth of the item in money </li></ul></ul>
  12. 12. Money’s Importance in Economics <ul><li>Money is anything exchanged for goods or services </li></ul><ul><ul><li>Currency is money used in a country </li></ul></ul><ul><ul><li>The value of money is how much it will buy </li></ul></ul><ul><ul><li>Change in prices can cause change in the value of money </li></ul></ul>
  13. 13. The value of money <ul><li>$1 = $.43 (2000) </li></ul><ul><li>$1 = $20 (1930s- 40s) </li></ul><ul><li>$1 week wages = 40 hours+ 1930 </li></ul><ul><li>Car $3600 </li></ul><ul><li>House $10,000 </li></ul>
  14. 14. The Economic System <ul><li>Economic system is how people go about doing business </li></ul><ul><ul><li>How things are created, owned, or exchanged </li></ul></ul><ul><li>All countries have economic systems just modified in some way to meet their particular needs </li></ul><ul><ul><li>Capitalism versus communism </li></ul></ul><ul><ul><li>Major differences are based on property ownership and control </li></ul></ul>
  15. 15. Free Enterprise <ul><li>Free enterprise the way of doing business in the United States </li></ul><ul><ul><li>Allows for business to work with minimum governmental control </li></ul></ul><ul><ul><li>Allows people to work and make money for themselves </li></ul></ul><ul><ul><li>Many people own property </li></ul></ul>
  16. 16. Property Ownership <ul><li>Private ownership is having things people can call their own </li></ul><ul><li>Property is anything with value </li></ul><ul><li>Types of property </li></ul><ul><ul><li>Real is land and its natural features </li></ul></ul><ul><ul><li>Personal are items people personally use </li></ul></ul>
  17. 17. Business Ownership <ul><li>A business is a person or group that produces and/or sells goods and services </li></ul><ul><li>People who own businesses take risks </li></ul><ul><ul><li>A risk is the possibility of losing what has been invested </li></ul></ul><ul><ul><li>You also can benefit from a risk by making money </li></ul></ul>
  18. 18. Available Choices Within Free Enterprise <ul><li>You can choose what to produce, buy, and sell </li></ul><ul><li>You can set your price and be somewhat flexible </li></ul><ul><li>Decisions require a lot of information </li></ul>
  19. 19. Control Issues Present in Free Enterprise <ul><li>Few government controls </li></ul><ul><li>You can run the business as you chose, but dishonesty is unacceptable </li></ul><ul><li>Standards are imposed </li></ul><ul><ul><li>Help keep food clean and measured </li></ul></ul><ul><ul><li>People want a full portion of what they pay for </li></ul></ul>
  20. 20. 3 Types Businesses <ul><li>Sole proprietorship </li></ul><ul><li>Partnership </li></ul><ul><li>Corporations </li></ul>
  21. 21. Sole Proprietorship <ul><li>Business owned by 1 person </li></ul><ul><ul><li>Responsible for all areas of operations </li></ul></ul><ul><ul><ul><li>hire, fire, buy, sell, supervise, submit government forms and all other work </li></ul></ul></ul><ul><ul><li>Must have all the money to start the business </li></ul></ul>
  22. 22. Partnerships <ul><li>Co-owners </li></ul><ul><ul><li>Business owned by 2 or more people </li></ul></ul><ul><li>Profits and losses are split equally between all members </li></ul>
  23. 23. Corporation <ul><li>Association of members doing business </li></ul><ul><li>Chartered by a state government </li></ul><ul><li>People who buy stock are called stakeholders or stockholders and elect a Board of Directors to run the corporation </li></ul><ul><ul><li>Paid dividends (part of the profit) </li></ul></ul><ul><li>Cooperatives provide members with services - marketing co-ops help market farm products </li></ul>
  24. 24. How Consumers Affect Competition <ul><li>Businesses must have customers to buy goods and services </li></ul>
  25. 25. Consumers <ul><li>Determine what type of business </li></ul><ul><ul><li>If consumers won’t buy a product, it won’t be produced </li></ul></ul><ul><li>A consumer is a person, business, or agency that uses goods and services </li></ul><ul><ul><li>All consumers have limited money and must decide how it will be spent </li></ul></ul>
  26. 26. Competition <ul><li>Consumers will choose what they like best compared with its cost </li></ul><ul><li>Competition allows consumers to choose between similar products </li></ul><ul><li>Monopoly exists if one producer controls products </li></ul><ul><ul><li>Not good in free enterprise systems </li></ul></ul><ul><li>Advertising influences what people will buy </li></ul><ul><ul><li>Never use untruthful advertising </li></ul></ul>
  27. 27. Entrepreneurship <ul><li>Creating goods or services to meet a unique need </li></ul><ul><ul><li>“New” things </li></ul></ul><ul><li>An Entrepreneur is a person who takes risks in creating and developing new products and ways to market them </li></ul><ul><ul><li>Must be a very creative person with creative ideas </li></ul></ul>
  28. 28. Test Your Knowledge <ul><li>What is economics? </li></ul><ul><li>How does supply/demand relate to the prices consumers pay? </li></ul><ul><li>What is currency? Name the currency in 3 countries? </li></ul><ul><li>Why is creating goods and services a goal for any nation? </li></ul><ul><li>What is the difference between real and personal property? </li></ul>
  29. 29. Test Your Knowledge con’t <ul><li>What are the ways of doing business? Explain each. </li></ul><ul><li>Who are consumers and why do they play a valuable role? </li></ul><ul><li>What is the difference between competition and a monopoly? </li></ul><ul><li>What is entrepreneurship? </li></ul>
  30. 30. Match Answers to Correct Statement <ul><li>Profit paid to a stockholder in a corporation </li></ul><ul><li>Study of how people get what they want </li></ul><ul><li>Amount of product that will be sold at a given price </li></ul><ul><li>Anything exchanged for goods and services </li></ul><ul><li>Amount of money used in buying or selling a good or service </li></ul><ul><li>Amount of goods or services available </li></ul><ul><li>A business owned by 2 or more individuals </li></ul><ul><li>Freedom to do business with a minimum of government control </li></ul><ul><li>The possibility of losing something </li></ul>Economics Supply Demand Money Price Free Enterprise Risk Partnership Dividend Cooperative
  31. 31. Chapter 5 test <ul><li>1.What is economics? </li></ul><ul><li>2.Define and describe supply and demand. </li></ul><ul><li>3.How does price affect economics? </li></ul><ul><li>4.What importance does money play in economics? </li></ul><ul><li>5.Explain an economic system. </li></ul><ul><li>6.Explain free enterprise. </li></ul><ul><li>7.What is the difference between property and business ownership? </li></ul><ul><li>8.List 3 ways of doing business and explain all 3. </li></ul><ul><li>9.Who are consumers and what is their role? </li></ul><ul><li>10. Entrepreneurship important, why? </li></ul>