Economics
What is Economics? Economics: the branch of social science that deals with the production and distribution and consumption of goods and services and their management
What questions do economist ask? What to produce? How to produce? For whom to produce?
Scarcity Scarcity: condition where human wants are greater than the available supply. Time Goods Labor Capital Resources Land & oil
Price What happens to price when items are scarce?
Price What happens to price when items are scarce?
Production the making of goods available for use – Resources are turned into goods & services • Resources – – – Natural resources Labor capital
distribution the act or process of distributing the marketing of goods How does the consumer get the goods or services? – – Movement Who decides?
consumption the act or process of consuming the amount consumed Satisfying our needs and wants by choosing goods & services – consumer
4 Types of Markets Economic Markets Traditional Command Mixed Free (market economy)
Traditional Economy • Economic System that answers economic questions the way they have always been answered – – Primitive tribe Ainu in Japan Native Brazilians (rain forest) Amish
Traditional Economy • Strengths • Minimizes problems within society • Weaknesses – Restricts individuals – Lacks advancements – Lacks new technology – Lacks economic growth
Market Economy • Economic is a system based on private ownership, free trade, competition – – Price is determined by supply & demand Also known as • • • Free Market Capitalism Example: United States
Market Economy • Strengths – Freedom • • • Buy & sell Entrepreneurship Advancements – technology
Command Economy • Is a system in which the central government makes all economic decisions. – Government answers these questions • • • – What good to produce? How much goods to produce? What price will be charged? Examples: • North Korea & Cuba
Command Economy • Owns & controls most businesses • People do not have a say • Regulate the market – Control • Production & Distribution of goods & services
Mixed Market • An economy that uses elements of both the command & market economic systems – • Example is China Includes – – – Government purchases Employment Taxation Redistribution regulation
Market Economhy
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