Transcript Economics - davis.k12.ut.us

Part I
 The
study of producing & using
goods/services to satisfy human wants is
called economics
 Businesses
make the economic system
work by providing & distributing
good/services
 Economic
want: Desire for scare material
goods/services
 clothing, housing, cars, hair care, medical attention,
public transportation
 Scarce because no economic system has the
resources to satisfy all the wants
 Noneconomic
want: Desire for
nonmaterial things that are not scarce
 Air, sunshine, friendship, happiness
 The
ability for a good or service to satisfy
a want
• A good/service that has utility is useful to society
• A good/service is not useful if it is not available
for use in the right:
 Form – particular fabric, style
 Place – nearby store
 Time – store is open, in stock
 Possession – price you can afford
Factors of Production:
Natural Resources
A country’s ability to
produce goods/services
with the natural
resources of the land
Labor
Human effort (mental, physical) that goes
into the production of goods/services
 Human capital: value of a person’s accumulated knowledge
& skills
Capital Goods
Buildings, tools, machines, & other equipment
used for production that does not directly satisfy
human wants
Entrepreneurship
Some one willing to take a risk and start a
business to sell the goods/services
 Brings together the other three factors
 No
country has enough resources to
satisfy all wants of the people for
material goods/services
 An
economic system is the way for a
country to decided how to use its
productive resources
 It decides what, how and for whom goods/services
will be produced
Market Economy
• Individuals buying decisions in the marketplace
determine what, how, and for whom
good/services will be produced
Example: consumers choose to buy whole-grain bread
producers will sell whole-grain bread
• Individuals own most of the factors of production
(land, factories, equipment, etc.)
Example: United States
Command Economy
• Central planning authority, under the control of
the government, owns most of the factors of
production & determine what, how, and whom
 Government decides how the factors of production
will be used
Examples: Korea, Cambodia, Vietnam, Cuba
Mixed Economy
• Uses aspects of a market and a command
economy to make decisions about what, how, and
whom good/services will be produced
 Government makes decisions for certain goods like
telephone, schools, health care, post office
• No country has a pure market or command
economy. Although some have more elements of
one than another
 Each
country has a political & economic
system
• The political system nearly always determines
the economic system
• History shows that when there is political
freedom there usually found economic freedom
Capitalism
• Citizens are free to do business, produce & distribute
what you want, and own property
• What could be a disadvantage to an economy
without government control?
Socialism
• Government controls how resources are used
• Socialists do not agree how much government
should control resources.
 There are extreme & middle-of-the-road socialists
Communism
• Extreme socialism in which all or almost all of the
nation’s resources are control by the government
Demand
• The number of products that will be bought at a
given time at a given price
 By people who want it, have money to buy it, and are willing
to spend the money for it
• Demand can affect Price
 When the demand increases the price increases
 When the demand decreases the price decreases
Example: Computer Technology
Supply
• The number of the same product that will be
offered for sale at a particular time & price
• Supply can affect Price
 If the supply decreases the price increases
 If the supply increases the price decreases
Why is competition in a particular industry
like “computers” good for the buyer?
 In a capitalistic system (free-enterprise)
• The seller tries to make a profit
• The buyer tries to buy a quality product at the
lowest possible price
 Competition
is the rivalry among sellers
for consumer’s dollars
• Consumers get quality products for fair prices
 The
number of firms competing in the
market
 The amount of similarity between the
products of competing businesses
 Sellers
compete to give the highest
quality product for the best price.
Price
Quantity
 Exists
when only one company provides
a product or service without competition
from other companies
• Disadvantage – control price, quantity, takes
away choice
• Advantage – keeps the price down for natural
monopolies
Price
Quantity
 Oligopoly
–A small group of large
suppliers dominate a market & produce
similar versions of a product.
 Not quite monopoly but getting there
 Car Industry
Price
Quantity
 The
market in which there are many firms
competing with products that are
somewhat different.
Price
Quantity
Monopolistic competition with few product differences
 Temporary
Monopoly – exists until
another company can produce & sell a
similar product
 New & popular product