Transcript economics ppt - GED Options at CCC

Economics
• Macroeconomics
• Large Scale
– The economy of a
country
– The economy of
Salem
– The economy of
the auto industry in
the U.S.
• Microeconomics
• Small scale
– A single business
– The auto industry
in Salem
Economic Systems
An economic system is the method used by a society
to produce and distribute goods and services.
Traditional economies rely on habit, custom, or ritual to
decide what to produce, how to produce it, and to whom to
distribute it.
In a centrally planned economy the central government
makes all decisions about the production and consumption
of goods and services.
In a market economy economic decisions are made by
individuals and are based on exchange, or trade.
Mixed economies are systems that combine tradition and
the free market with limited government intervention.
Free Market
• Capitalism
• In every transaction, the buyer and seller consider only
their self-interest, or their own personal gain. Selfinterest is the motivating force in the free market.
• Producers in a free market struggle for the dollars of
consumers. This is known as competition, and is the
regulating force of the free market.
• The interaction of buyers and sellers, motivated by selfinterest and regulated by competition, all happens
without a central plan. This phenomenon is called “the
invisible hand of the marketplace.”
Centrally Planned
• In a centrally planned
economy, the
government
owns both land and
capital. The
government
decides what to
produce, how much to
produce,
and how much to
charge.
• Socialism is a social and
political philosophy based
on the belief that
democratic means should
be used to distribute
wealth evenly throughout
a society.
• Communism is a political
system characterized by
a centrally planned
economy with all
economic and political
power resting in the
hands of the government.
Trade vs Barter
• Exchange
• Barter
To trade one thing for another.
The exchange of goods or service
without money.
Example: I want to trade in my
green disk for a blue one.
Example: I’ll give you my cake for
your ice cream.
Three Kinds of
Money
Cash
Checks
Credit Cards
Needs vs. Wants
• Needs – what people
must have to live.
Food
Clothing
Shelter
• Wants – the things we
would like to have,
but can live without.
Economic Choice
You make an economic choice when you only have money
for certain items, not all.
Example:
I do not have enough money for both popcorn and a pretzel. I must
choose, so I buy the popcorn. That is my economic choice.
YUM!
Opportunity Cost
Opportunity cost is what you must give up
when you make an economic choice.
Example:
I chose the popcorn, so I have to give up the pretzel.
That is my opportunity cost.
Supply and Demand
• Supply is the amount
of a good or service
available.
• Demand is what
people are willing and
able to buy.
I would like to buy one candy cane, please.
Supply and Demand
Scarcity - Sometimes there is not enough of
something to go around. That item is scarce.
The Ice
Cream
Singers
Oh no! Ice cream is scarce!
“I scream, you scream, we all scream
for ice cream! La, la, la, la, la!”
Scarcity vs Shortage
• Scarcity occurs when there are limited
quantities of resources to meet unlimited
needs or desires
• Shortages occur when producers will not
or cannot offer goods or services at
current prices
What is the difference between a shortage and scarcity?
(a) A shortage can be temporary or long-term, but scarcity always
exists.
(b) A shortage results from rising prices; a scarcity results from
falling prices.
(c) A shortage is a lack of all goods and services; a scarcity
concerns a single item.
(d) There is no real difference between a shortage and a scarcity.
2. Which of the following is an example of using physical capital to
save time and money?
(a) hiring more workers to do a job
(b) building extra space in a factory to simplify production
(c) switching from oil to coal to make production cheaper
(d) lowering workers’ wages to increase profits
1.
What can I do with my money?
• Spend it
• Save it
• Invest it
Give people money to use to
make more moneys, like in stocks
and bonds.
Goods and Services
• Goods
• Services
Three types of resources work together in our
economy
Human Resources
Natural Resources
Capital Resources
Land
Labor
Capital
Popping Corn
The human effort needed
to pop the corn
Corn-Popping
Device
Vegetable Oil
Natural Resources are things we get from nature.
Oil
Coal
Trees
Water
Human resources are jobs done by humans at
work.
Capital resources are the machines, tools and
buildings needed to do a job.
Producers
Producers make goods or provide services.
Consumers
Consumers use or buy goods and services.
Economic Specialization
Individuals or groups who concentrate on
one type of good or service.
Apple farmer
Carpenter
Interdependence
People need each other for goods and
services.
The Ancient Greeks traded their goods across the
Mediterranean Sea.