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Lesson 7 economics


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Lesson 7 economics

  2. 2.  The Industrial Revolution created an enormous amount ofopportunity to “get rich” Mass production of goods Middle Class now has a new consumer (women) Transportation makes goods readily available all over theworld No government restrictions or laws to drive down profits.Here is what happenedHOW DOES THE INDUSTRIAL REVOLUTIONCHANGE OUR ECONOMY?
  3. 3.  Capitalism: economic system in whichthe means of production are privatelyowned and operated for a privateprofit. Laissez-faire economy: decisionsregarding supply, demand, price,distribution, and investments are madeby private actors Profit goes to owners who invest in thebusiness Wages are paid to workers employed bycompanies and businessesCAPITALISM
  4. 4.  MONOPOLY: when a single company or group owns all ornearly all of the market for a given type of product or service.There is NO competition amongst businessesResult: high prices and inferior productsEx:Sirius XM Radio Sirius Radio controls most of the market in regards tosatellite radio. Can you think of more than 2 satellitecompanies other than Sirius Radio? Sirius had very little if any competition and therefore canprice their service at a higher rate and make more profit. Thiswas a HUGE PROBLEM during the Industrial RevolutionEFFECTS OF CAPITALISM
  5. 5. THINK ABOUT IT! What might some results be if one company was the onlyplace where you could buy a specific product?
  6. 6. PEOPLE THAT HAD A PROBLEM WITHCAPITALISMUTOPIANS MARXISTSTHE SOCIALISTS:Socialist beliefs:• People as a society would operate and own the means of production, notindividuals (capitalist)• Their goal is a society that benefits everyone, not just the rich• Tried to build perfect communities (utopias)• They want everyone to be equal in every wayKARL MARXUtopian Society
  7. 7.  Wrote: The Communist Manifesto, 1848 A response to the injustices of capitalism;argued that capitalism would produce internaltensions which would lead to its destruction Communism = a political philosophy that aimsfor classless and stateless society structuredupon common ownership of the means ofproduction and an end to private property Marx believes that capitalism will eventuallydestroy itselfAs a result of The Communist Manifesto, theproletariat (working class) started to participatein politics. They wanted to ensure social,economic, and political equality for everyone!So the fight began!KARL MARX: COMMUNISM
  8. 8.  Author of “The Wealth of a Nation” He is a believer of Laissez-faireeconomics; defender of freemarkets Believes economic libertyguarantees economic progress Economic natural laws – self-interest, competition, supply anddemandADAM SMITH
  9. 9. Capitalist Believe in Laissez-faireconomics (free trade/nogovernment regulations Resources are owned by aprivate owner Individual freedom beforesociety Earn their worth Profits are owned by aprivate owner Stands for private property Supply and DemandEconomicsSocialist No difference betweenrich and poor. Community ownsresources and means ofproduction Government runseconomy Abolishes privateproperty Society before individualfreedomCAPITALISM VS. SOCIALISM