Transcript ECONOMICS

WHY?
The Benefits of Studying
ECONOMICS
 Helps
You to Decide Who
to Vote For in an Election
 Helps You to Understand
Your Boss’ Thinking
 Helps You to Make
Money Every Day
The Benefits of Studying
ECONOMICS
 Helps
You to Understand
World News
 Helps You Participate in
the System
 Helps You to Spend Your
Money Wisely
The Benefits of Studying
ECONOMICS
 But
Mostly, It Will Also
Help You to Understand Business &
Marketing and,
Therefore, Do Better in
This Class
HOMEWORK
1.
2.
3.
Read Chapter 1, pages 4 – 15
Complete the Crossword Puzzle
Provided
On the Puzzle sheet, answer any two
“Critical Thinking” questions from
the text. Use complete sentences.
Summarize the question in the first
sentence.
OBJECTIVE
Be Able to Define
Economics
ECONOMICS
The Process of Making
Decisions to Satisfy
Unlimited Wants & Needs
Using Limited Resources
ECONOMICS
The Process of Making
Decisions to Satisfy
Unlimited Wants &
Needs Using Limited
Resources
What the Heck
Does That Mean?
ECONOMICS
 The
Process of
 Making Decisions
 To Satisfy
 Unlimited Wants & Needs
 Using Limited Resources
ECONOMICS
 The
Process of
 Making Decisions
 To Satisfy
 Unlimited Wants & Needs
 Using Limited Resources
ECONOMICS
 The
Process of
 Making Decisions
 To Satisfy
 Unlimited Wants & Needs
 Using Limited Resources
ECONOMICS
 The
Process of
 Making Decisions
 To Satisfy
 Unlimited Wants & Needs
 Using Limited Resources
ECONOMICS
 The
Process of
 Making Decisions
 To Satisfy
 Unlimited Wants & Needs
 Using Limited Resources
ECONOMICS

“The Process of Making
Decisions To Satisfy Unlimited
Wants & Needs Using Limited
Resources.”
 How
could you state this
definition more
simplistically?
ECONOMICS
 Economics
is
Making Decisions
So That I Get the
Most for the
Least!!!
What Are Your
Economic Decisions?
Should I Get Out of Bed in the
Morning?
 What Classes Should I Take?
 What Type of Car Should I Buy?
 What’s For Dinner?
 Who Should I Vote For?

What Are Your
Economic Decisions?





Should I Get Out of Bed in the
Morning?
What Classes Should I Take?
What Type of Car Should I Buy?
What’s For Dinner?
Who Should I Vote For?
 What
Job Should I Get ?
Important Economic
Concepts
 Rewards
 Costs
 Decisions
Important Economic
Concepts
 Rewards
 Costs
 Decisions
Benefits
(What I Get Out Of It)
What I Give Up
(Resources)
Choices
OBJECTIVE
Be Able to Define:
Benefits
Economic Resources
HOMEWORK
1.
2.
3.
Read Chapter 2, pages 20 – 31
Complete the Crossword Puzzle
Provided
On the Puzzle sheet, answer any two
“Critical Thinking” questions from the
text. Use complete sentences.
Summarize the question in the first
sentence.
Benefits

What a Decision
Will Do For Me:
•Make
Me $$$
Benefits

What a Decision Will
Do For Me:
•Sense of
Relaxation
Benefits

What a Decision
Will Do For Me:
•Joy
Benefits

What a Decision Will
Do For Me:
•Personal
Satisfaction
Benefits

What a Decision Will
Do For Me:
•Give Me
Confidence
Benefits

What a Decision Will
Do For Me:
•Recognition
By My
Peers
Economic Resources
LAND
LABOR
CAPITAL
&
Economic Resources
LAND
Natural Resources
LABOR
People with Skills
CAPITAL
Money or things . . .
&
QUESTION
How Does a Country
Make its Economic
Decisions?
ANSWER
Through the Use of an
Economic System
OBJECTIVE
Be Able to List the
Three Basic Economic
Questions Every
Country’s Economic
System Must Answer
Three Basic Economic
Questions



What Should We
Produce?
How Should We
Produce?
Who Gets What
We Produce?
OBJECTIVE
Be Able to List the Three
Basic Economic Questions
Every Country’s Economic
System Must Answer
(On Your Island)
OBJECTIVE
Be Able to Identify the
Three Primary Economic
Systems Used in the World
Today
Economic Systems of
the World

Free Enterprise
• Capitalism
• Market Economy

Socialism
• Mixed Economy
• Democratic Socialism

Communism
• Planned Economy
• Command Economy
OBJECTIVE
Be Able to Describe the
Important Characteristics
of Each Type of Economic
System
Important Characteristics
of All Economic Systems

Allowance for Business
Ownership
Important Characteristics
of All Economic Systems

Production of Consumer
Products
Important Characteristics
of All Economic Systems

The Amount of Competition
Important Characteristics
of All Economic Systems
• The Amount of
Employment Available
Important Characteristics
of All Economic Systems
• Private Property Rights
Important Characteristics
of All Economic Systems
• Profit Potential
Important Characteristics
of All Economic Systems
• Social Services Available
OBJECTIVE
Using the Important
Characteristics of All
Economics Systems, Describe
Each Economic System
Primary Economic
Systems
Ownership
Communism
Socialism
Free
Enterprise
Consumer
Products
Competition
Employment
Private
Property
Profit
Social
Services
OBJECTIVE
Be able to identify
two advantages &
two disadvantages
of each economic
system
Story



A Lesson on Socialism
"An economics professor said he had never failed a single student before but had,
once, failed an entire class. The class had insisted that socialism worked - and that
no one would be poor and no one would be rich, a great equalizer for all, for society.
The professor then said ok, we will have an experiment in this class on socialism.
He said that all grades would be averaged and everyone would receive the same
grade so no one would fail and no one would receive an A. After the first test the
grades were averaged and everyone was given a B. The students who studied hard
were upset, and the students who studied little were happy. But, as the second test
rolled around, the students who hadn't studied much for the first test had studied
even less, and the ones who studied hard weren't motivated to study hard again, and
they decided they wanted a free ride too; so they studied little. The second Test
average was a D! No one was happy. When the 3rd test rolled around the average
was an F.
The scores never increased as bickering, blame, name calling all resulted in hard
feelings and no one would study for anyone else. All failed .... and the professor told
them that the socialism they wanted would ultimately fail, as they had, because the
reward of success normally goes to those that work harder, but when government
takes the reward away; few will try so no one will succeed."
QUESTION
What Economic
System Do We Use
in This Country?
ANSWER
The Free Enterprise System
Marketing is Part of Our
Economic System
MARKETING
OBJECTIVE
Be able to describe the most
important facets of a “Free
Enterprise System”
Free Enterprise
 Freedom
of
Choice
 The Profit Motive
 Competition
 Open Mkt. (S & D)
 Limit Gov. Control
Free
Enterprise
OBJECTIVE
Be able to identify the
freedoms generally allowed
in a free enterprise system
Freedom of Choice
When to Buy
 When to Sell
 To Make Profit
 To Compete
 To Own
 Freedom to Decide

OBJECTIVE
Be able to describe & graph
the open market using the
concepts of
“Supply & Demand”
Define Supply & Demand

Demand:
The ability & desire of
customers to own
products

Supply
Products/Services
available for sale
1.) Offer ten tootsie rolls for sale starting at a high price & working down, graph results. Then give
the tootsie rolls to a student to keep, but ask at what price they may be willing to make some
available for sale; graph the results.
ACTIVITY
“The Tootsie Roll Game”
Tootsie Roll
“Demand Schedule”
$ .30
$ .25
$ .20
$ .15
$ .10
$ .05
0
0
2
4
6
8
10
12
Tootsie Roll
“Supply Schedule”
$ .30
$ .25
$ .20
$ .15
$ .10
$ .05
0
0
2
4
6
8
10
12
Supply & Demand
Graphing
Supply & Demand
Graphing
Supply & Demand
Graphing Demand
Supply & Demand
Graphing Supply
Supply & Demand
(Finding the Equilibrium Point)
Supply & Demand
(Finding the Equilibrium Point)
At this point I will
Max. my profit &
have no waste:
Approx. 8 items @
$ .09 each = $ .72
Supply & Demand
A Change in Demand
D2
D1
Supply & Demand
A Change in Demand
D2
D1
D3
Supply & Demand
A Change in Supply
S3
S1 S2
OBJECTIVE
Be able to describe what
the terms “buyer’s” and
“seller’s” market mean
Supply & Demand
Graphing
Buyer’s Market
Supply & Demand
Graphing
Seller’s Market
The Laws
of
“Supply & Demand”
SEE HANDOUT
OBJECTIVE
Be able to define elastic &
inelastic demand
Supply & Demand
Elasticity
S1
D1
Inelastic
Demand
Supply & Demand
Elasticity
S1
Elastic Demand
D1
ACTIVITY
Complete the Supply and
Demand Study Guide
OBJECTIVE
Be able to define the following
terms associated with the concept
of PROFIT:
Income, Expenses, Costs, Gross
Profit, Net Profit, & Risk
Profit = Incentive
Income - the amount of money a business
receives from the sales of its goods/services
 Cost - The amount of money a company
spends to get product into the store
 Expenses - The amount of money a company
spends on the operation of the business

Profit = Incentive
Gross Profit - Amount of money made after
the cost of goods is subtracted (Income - Cost)
 Net Profit - The amount of money made after
the cost of goods & expenses are subtracted
out (Income - Cost - Expenses)
 Risk - The “gamble” a business takes that it
might lose money instead of making money

Profit is Good
What Do We Risk?
Our own money
 The money of other people (friends, relatives,
banks, etc.)
 Our time & energy that we could spend on a
career
 Our hopes/dreams (self esteem, inheritance,
freedom, etc.)

OBJECTIVE
Be able to discuss ways a business can
increase its profits
Increasing Profits
Increase Sales
 Increase Efficiency
 Boost Productivity
 Raise Prices

OBJECTIVE
Be able to define the types of competition &
discuss in a short answer question the
advantages to competition in our economy
Competition
A rivalry between two or
more companies to
attract scarce (limited)
customer dollars
 Market Share - A
company’s part of the
total market for a product

35%
Types of Competition
 Direct
 Price
 No
vs. Indirect
vs. Nonprice
Competition (Monopoly)
MONTH RUSSIA
1X Sept
1X Oct
1X Nov
1X Dec
2X Jan
2X Feb
2X Mar
5X April
TOTAL
USA
KUWAIT
IRAN
IRAQ
SAUDI
ARABIA
Benefits of Competition
New Products & Services
 Variety of Products/ Services
 Lower Prices
 Better Customer Service
 Higher Quality Merchandise
 More Information Provided
 Etc.

OBJECTIVE
In a matching exercise & short essay, be able
to describe the role of government in a
Free Enterprise system
HOMEWORK
1.
2.
3.
Read Chapter 11, pages 178 – 189
Complete the Crossword Puzzle
Provided
On the Puzzle sheet, answer any one
“Critical Thinking” question from the
text. Use complete sentences.
Summarize the question in the first
sentence.
The Role of Government
Its
the
Law
Protect Business Property
(fire, police, patents)
 Enforce Contracts
 Settle Disagreements
 Collect & Set Taxes

The Role of Government
Its
the
Law
 Acts
as a Consumer
 Provides for the Public
Good
 Provides for National
Security
The Role of Government
Provide for Public Welfare
 Protect Public Health
 Regulate/Stabilize Economy
 Conserve the Environment
 Protect Consumers
 Protect Competition
 Regulate the Workplace

Its
the
Law
Government Services
Military
 Police
 Fire Protection
 Education

Infrastructure
 Postal
 Libraries
 Welfare Services

Governmental
Rules & Regulations

Anti-Monopoly Regs.
• Sherman Anti-Trust
Act of 1890
• Clayton anti-trust Act
of 1914
• Federal Trade
Commission (FTC)
 Other
•
•
•
•
Acts
Consumer Product
Safety Commission
Securities/Exchange
Commission (SEC)
Wheeler-Lea Act
Zoning, Licensing,
Building Codes
Rules & Regulations

Worker Protection Rules
• Equal Employment
Opportunity Commission
• Occupational Safety &
Health Admin. (OSHA)
• Minimum Wage Rules
• Child Labor Laws

Business
Protection Rules
• Patents
• Copyrights
• Trademarks
Rules & Regulations

Consumer Protection
• Robinson-Patman
Act
• Food & Drug
Administration
(FDA)
Government Taxes

Progressive
Taxes

Proportional
(Flat) Taxes

Regressive Taxes
Government Taxes
Major Types

Income Taxes

Sales Taxes

Property Taxes

Business Taxes
Government Taxes
Major Types

Income Taxes
• Largest income source
• Levied against individuals &
business
• Based on salaries/income
• Allows for “deductions”
• Business collects & sends to the
government
Government Taxes
Major Types

Sales Taxes
• Levied against sales of
goods/services
• Varies from state to state
• Collected by the business
Government Taxes
Major Types

Property Taxes
• Levied against the value
of most personal property
• Levied against individuals
& business
Government Taxes
Major Types

Business Taxes
• Income (Federal, State, &
Local)
• Personal property
• Payroll
• Social Security
• Unemployment
Government Taxes
Major Types

Business Taxes (cont.):
•
•
•
•
•
Sales taxes
Corporation taxes
Business licenses
Car/truck licenses
Fees for service
OBJECTIVE
Be able to describe the official measures of an
economy’s health or, in other words, “How do
we know if the economy is doing well?”
HOMEWORK
1.
2.
3.
Read Chapter 3, pages 36 – 47
Complete the Crossword Puzzle
Provided
On the Puzzle sheet, answer any one
“Critical Thinking” question from the
text. Use complete sentences.
Summarize the question in the first
sentence.
WHY?
BECAUSE
“Its the economy!”

The state of the
economy is a major
factor in how people
vote for public officials
Economic Goals

Low Inflation
• 1 - 5% is ideal
• 10% + is painful
• Deflation is bad also

Full Employment
• 96% is full
• All 16+ yrs. old & able to work
Economic Goals

Productivity
• Found by dividing input (of
resources) by output ($ value)

Stable Prices
• For example, between 1965 &
1985, prices increased 300%;
wages did not
Economic Measuring Devices

GNP (GNDP)
• Total value of a nation’s
products & services in a year:
• Goods exported minus
imports
• Consumer goods
• Investment in business
• Government purchases
Economic Measuring Devices
Standard of Living:
• Measure of the value of goods &
services people have:
• Divide GNP by population
• For example, one year, GNP was
$4,235,000,000,000 & the population
was 240 million. Therefore, the
Standard of living was $17,646
Economic Measuring Devices

Consumer Price Index
• Measures the average price of
400 different normal
household products
• Also called the “Cost of
Living Index”
Economic Measuring Devices

Unemployment Figures
• % of workforce out
unemployed
OBJECTIVE
Be able to describe the “economic cycle”
and what factors influence its fluctuations
The Economic Cycle
Prosperity
100
90
Recession Recovery
80
GNP
70
60
50
40
30
20
10
0
Depression
TIME
The Economic Cycle
Make 2
Large
Charts
Stage/ Prosperity Recession Depression Recovery
Result
1
2
3
4
5
Prosperity
Lowest
Unemployment
 Maximum Output
 Highest Consumer
Spending
 Possible Inflation

Recession
General Slowdown in
the Economy
 Unemployment Rising
 Fewer Good/Services
Being Produced
 Spending Slows Down

Depression







Prolonged Recession
Lowest Amount of Spending
Highest Unemployment
Production is at its Lowest
Tax Collection is Down
Possible Deflation
Poverty Occurs
Recovery




Economy Picks Up
Unemployment
Decreases
Production
Increases
Spending Increases
The Economic Cycle
Stage/ Prosperity Recession Depression Recovery
Action
1
2
3
4
5
The Economic Cycle
 What
would you
do if you were a
________ during a
________ business
cycle?
Prosperity
 Business:
Prosperity
 Business:
•
•
•
•
Invests/Expands
Hires More People
Pays More in Taxes
Maintains Max.
Inventories
• Reaps Profits
• Keeps Prices High
Prosperity
 Consumers:
 The
Government
Prosperity
 Consumers:
• Work
• Spend, Spend, Spend
• Save Some
 The
Government
• Collects Taxes
• Keeps Interest Rates High
Recession
 Business:
Recession
 Business:
• Starts to slow down
production
• Reduces stock
• Cuts back on
investments &
expansion
• Lays off staff
Recession
 Consumers:
 The
Government
Recession
 Consumers:
• Spend less & save more
• Protect their jobs more
 The
Government
• Encourages investment by
lowering interest rates
• Might spend more to
stimulate the economy
Depression

Business
Depression

Business
• Has massive layoffs or
lowers salaries
• Stops spending
• Eliminates stock (sales)
• spends their savings
• Cuts back on quality
• Lowers prices
Depression

Consumers:
Depression

Consumers:
• Stop Spending
• Spend Their Savings
• Convert Wealth to
Dollars
• Loiter
• Open Their Own
Businesses
Depression
The Government:
Depression
The Government:
• Lowers interest rates more
• Offers job programs
• Spends more on welfare
services
• Spends more to stimulate the
economy (?)
• Cheerleads
Recovery
Business:
Recovery
Business:
• Does the opposite of a
recession:
• Hires
• Spends more
• Invests
• Produces
• Risks more
Recovery
 Consumers:
 The
Government:
Recovery
 Consumers:
• Spend more
• Save less
 The
Government:
• Collects more tax money
• Raises interest rates
• Spends more (?)
The Economic Cycle
GNP
TIME
OBJECTIVE
Be able to define the terms associated
with international trade
HOMEWORK
1.
2.
3.
Read Chapter 10, pages 162 – 173
Complete the Crossword Puzzle
Provided
On the Puzzle sheet, answer any one
“Critical Thinking” question from the
text. Use complete sentences.
Summarize the question in the first
sentence.
International Trade



Imports - Goods & services
brought into the country
Exports - Goods & services
sent out of the country
Balance of Trade - The
difference between a
country’s imports &
exports
International Trade


Tariff - A tax put on goods
& services brought into a
country
Quota - A limit on the
number of goods & services
that can be brought into a
country
International Trade

Embargo - The banning of
sales of goods & services
from a specific country.
Thus Endth the Economics Unit
Yippee!!
Important Characteristics
of All Economic Systems
• The Amount of
Employment Available
• Private Property Rights
• Profit Potential
• Social Services Available