Transcript Chapter 3 Notes

Louisiana’s
Economy
Chapter 3
Basic Economic Concepts
Wants – things that people
would like to have to make
their lives more comfortable.
Needs- Food, clothing, and
shelter
Goods – physical item such as
food, clothing, cars, and
houses.
Services – activities people do
for a fee (car repairs, house
painting, etc.)
Basic Economic Concepts
A
consumer is a
person who satisfies
a want or a need
by buying a good
or service
A
producer is a
person or business
who uses resources
to make goods or
provide services
Basic Economic Concepts

A natural resource is a
gift of nature, part of the
natural environment
such as water, trees, or
minerals.


Human Resources are
the people who
produce the goods
and provide the
services.
Capital resources are
the money and
property – factories,
tools, bridges,
machines , etc. used to
produce goods and
services.
Basic Economic Concepts

Capital resources are limited and are often
said to be scarce. Scarcity means that
people need and want more than the
available resources can provide.
Bellringer

1. Scarcity means ___________





A. people need and want more than is available
B. is the quantity of a good or service
C. the amount left after costs are subtracted from the
price
D. Activities people do for a fee
2. _____________ is an example of a natural
resource




A. Money
B. Machines
C. People
D. Water
 Supply
and Demand
Basic Economic Concepts
Costs and Benefits:
If you are given $50 to spend at the mall.
You really want the new Madden game.
You also really want a whole new outfit for
the school dance on Friday. If you choose
the outfit, then you wont be able to get the
Madden game. The Madden game is your
opportunity cost, the value of your second
choice in a decision-making situation.
Basic Economic Concepts
Supply and Demand:
- Supply – is the quantity of a
good or service offered for
sale
- Demand- is the quantity of
a good or service
consumers are willing and
able to buy.
- Profit – the amount left after
costs are subtracted from
the price
Exit Ticket
Decide which of the following would be the
opportunity benefit and opportunity cost in the
following situation:
After high school, John has to decide if he
wants to begin working right away or if he wants
to go to college. If John starts working right
away, he will earn a paycheck faster. If he goes
to college, it means he will be in school for
another 4 years, but has the opportunity to
make double what he would without the
additional education. John decides to go to
college because the long term benefits
outweigh the benefit of a faster paycheck.
Bellringer
1. Thomas wants to take his girlfriend to dinner and
movie but he only has $25. He decides to skip dinner
and just go to the movie. The movie is ___________ .
A. The opportunity cost
B.
The tradeoff
C. The opportunity benefit
2. If the demand for a product increase and the
supply decrease, what will happen to the products
price?
 A. It will decrease
 B. It will increase
 C. It will increase and then decrease
Basic Economic Concepts
Economic Question
Basic Economic Concepts
Product or Service Development
As a team, come up with either a good or
service. Make sure to use the four
economic questions in your planning. One
person from you group will need to present
your good or service to the class and
answer all four economic questions.
Basic Economic Concepts
 There



are 3 types of economies.
1. Traditional economy
2. Command economy
3. Market economy
Bellringer
 What
are the four basic economic
questions:




1.
2.
3.
4.
Basic Economic Concepts
Traditional Economy
In a traditional economy, customs, habits,
and beliefs determine how the four basic
economic questions are answered.
Countries that use this type of economic
system are often rural and farm-based.
Basic Economic Concepts
Command Economy
In a command economy, the government
controls the economy and answers the four
basic economic questions. Command
economies are often seen in communist
countries.
Basic Economic Concepts
Market Economy
In a market economy, individuals answer
the four basic economic questions based
on supply and demand. This economy is
also known as free enterprise and is based
on private ownership and freedom of
individuals to make economic choices.
Bellringer
1.
Which of the following is a renewable resource?
a.
b.
c.
d.
2.
Oil
Gas
Salt
Pulpwood
Which of the following is a biological resource?
a.
b.
c.
d.
Lignite
Rice
Wildlife
Oil
Pop Quiz
1.
Which of the following is a renewable resource?
a.
b.
c.
d.
2.
Oil
Pulpwood
Salt
Natural gas
Which of the following is a biological resource?
a.
b.
c.
d.
Lignite
Wildlife
Oil
Sulphur
Pop Quiz
3. John wants to buy a new phone. He also wants to have
money for car. John decides to wait on the phone to
continue saving for the car. The phone is the ___________ .
A. The opportunity cost
B.
The tradeoff
C. The opportunity benefit
D. Supply
4. If the demand for a product increase and the supply
decrease, what will happen to the products price?
a) It will decrease
b) It will increase
c) It will increase and then decrease
d) It depends on the market
Pop Quiz
5. Which of the following is not an example of capital
resources?
a) Airports
b) Trains
c) Oil refineries
d) Stores
6. The early European settlers were part of which type of
economy?
a) Command
b) Free Enterprise
c) Market
d) Traditional
Pop Quiz
7. When people’s wants and needs are higher than available
resources.
a) Supply
b) Scarcity
c) Demand
d) Cost
8. Which of the following is not a Natural Resource?
a) Forest
b) Humans
c) Oil
d) Berries
Goods and Services
 An
economic system uses human, natural,
and capital resources to produce goods
and to provide services. Louisiana’s
economy produces a wide variety of
goods and services.
Goods and Services
Private Goods and Services
Goods and services produced in a market
economy. Private goods and services have
clear owners and are not available to
everyone. The benefits of private goods and
services are limited to the owners.
For example, if you buy and eat a hamburger,
no one else is eating your hamburger.
Goods and Services
Public Goods and Services
Some goods and services are provided by the
government because they are unlikely to be
provided by private businesses. They are usually
available to everyone. Public goods and
services meet the needs and wants of society
instead of individuals.
For example, public education, police
protection, public libraries and highways are all
public services.
Louisiana in the U.S. and
Global Economics
 The
first economic systems were simple
barter economies involving basic items.
 Today’s
economic systems are
interdependent. Producers and
consumers rely on each other and on
other economies to succeed.
Louisiana in the U.S. and
Global Economics

Advances in communication and
transportation have resulted in worldwide trade.

As a result, the United States has developed
new trade policies and agreements as part of
the global economy.

The North American Free Trade Agreement
(NAFTA) removed trade restrictions between
the United States, Canada, and Mexico.
Louisiana in the U.S. and
Global Economics

As a result of the NAFTA, some U.S. companies
moved to Mexico because the cost of labor is
cheaper there.

Fruit of the Loom closed several Louisiana
factories employing thousands of workers. The
economic impact was felt throughout the
affected communities.

Tariffs are taxes on imported goods. Its
purpose is to protect U.S. producers from the
competition of cheap imported goods.
Measuring the Economy

Economist gather information using economic
indicators, to measure the economy to determine
its success.
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The amount of goods and services produced in
the United States is measured by the gross
domestic product, This is the total market value of
all goods and services produced in the United
States in a certain time period.

Prices are measured by the consumer price index,
a monthly price survey for a list of goods and
services. Its checks for increases or decreases.
Measuring the Economy

A steady increase in the consumer price index shows
inflation, which means the buyer get less for his or her
money because prices have increased.

If a person’s income does not increase with inflation
they will not be able to buy as much.

Unemployment rates are another important indicator
about the U.S. economy. The unemployment rate
reports the percentage of people who are out of
work and are looking for jobs.

If unemployment rates are low, the demand for
workers is higher and producers have to pay more for
this human resource.