Transcript 06- Economics and Types of Economies

EOC Review
Civics and Economics
Economics Basics
& Types of
Economies
Civics and Economics EOC
Review
•What is
Economics?
Civics and Economics EOC
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• The study of how we
make decisions in a
world where resources
are limited.
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•What is scarcity?
–What is an example of
something that is scarce?
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• Scarcity occurs when
we do not have enough
resources to produce
all the things we would
like to have.
– Examples?
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• What are needs?
• What are wants?
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• Needs are required for
survival.
• Wants are things we
would like to have.
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•What is an
economic
model?
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• An economic model is a
representation of the real
world that is used to
explain how the economy
works or to predict what
might happen if the
economy changes.
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•What is a tradeoff?
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• Tradeoff– Alternative you face if you decide to
do one thing rather than another.
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•What is
opportunity cost?
– What may be an example?
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• Opportunity cost is the
cost of the next best
use of your time or
money.
– Examples?
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•What types of
costs do
businesses
incur?
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• Fixed Costs– The same no matter how many units
produced.
• Variable Costs– Expense that changes with the
number of units produced.
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• Total Cost
– Fixed + Variable = TOTAL
• Marginal Costs
– Extra, additional cost of producing
one additional unit of output.
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•What is revenue?
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• Revenue is money
coming in.
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•What is the cost
benefit analysis?
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• It compares marginal
costs with marginal
benefits of a decision.
– Which do you want to be higher?
Cost or benefit?
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•What is a
market
economy?
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• An economic system
where supply, demand,
and prices help people
make economic
decisions.
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•What is capitalism?
•What is free
enterprise?
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• Capitalism– A system where private citizens own most,
if not all, of the means of production.
• Free Enterprise– Businesses are allowed to compete for a
profit with minimum government
interference.
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•What are
incentives?
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• Rewards offered to try
and persuade people to
take certain economic
actions.
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•What are the 4
Factors of
Production?
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• Natural Resources– “gifts of nature”
• Labor– Both physical and mental.
• Capital– Tools used to make other products
• Entrepreneurship– Individuals that start new businesses,
introduce new product and improve
managementCivics
techniques.
and Economics EOC
Review
•What are goods?
•What are services?
Civics and Economics EOC
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• Goods- tangible
products
• Services- work done
for someone else
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•What is Gross
Domestic
Product?
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• GDP; total value in $ of
all the final goods and
services produced in a
country.
– What is a final good?
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•What is the
difference between
product and factor
markets?
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• Product markets– Where producers offer goods and services
for sale.
– Consumers spend their income here.
• Factor markets– Where resources are being bought and
sold.
– Consumers earn their income here.
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• What is productivity?
• What is the division of
labor?
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• Productivity- when scarce
resources are used
efficiently.
• Division of labor- breaking
down of job into smaller
parts.
– Becoming specialized.
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•Consumer
sovereignty
refers to what?
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• The consumer is
“king” or ruler of the
market.
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•What is competition?
•What is the profit
motive?
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• Competition– Struggle between buyers and sellers
to get the best products at the lowest
price.
• Profit motive– driving force that encourages people
to improve their material well being.
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• Who was Adam Smith?
What were his
economic philosophies
based on?
Civics and Economics EOC
Review
• Scottish economist and
philosopher.
• Adam Smith wrote Wealth
of Nations.
– Laissez-faire economics- government
should not interfere in the market place.
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•Who are
consumers?
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• We are all consumers.
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• What is disposable
income?
• Discretionary income?
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• Disposable income– Money a person has left over after
taxes paid on it.
• Discretionary income– Money left over after paying for
necessities.
– Can satisfy our wants.
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•What is
interest?
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• Payment people
receive when they lend
money.
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• What are imports?
• What are exports?
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• Import = good
purchased from
another country.
• Export = good sold to
another country
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•What are market
economies?
Civics and Economics EOC
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• Look back on your
sheet!
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•What are
command
economies?
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• the individual has little, if
any, influence on
economy.
• Major decisions all made
by central government.
• They “command”
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• What is communism?
• What is socialism?
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• What is socialism?
– Believe production should be owned and
controlled by society, directly or indirectly
through the government.
– Wealth would ideally be distributed equally among
all citizens.
• What is communism?
–
–
–
–
One class of people.
All property held in common
No need for a government
Developed by Karl Marx
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•What are
Mixed
economies?
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• Combines basic
elements of market and
command.
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•What countries
today might have
a command
economy?
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• North Korea
• Cuba
– China and Russia are still
transitioning to market economies.
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