Economics 2904

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Economics 2/9/04

• OBJECTIVE Examine the three main economic
  systems.
• I. Journal 9 pt. A
• -questions on Meet the Press
• II. Journal 9 pt. B
• -notes on economic systems
• III. Homework
• -Read Ch2 sec3, Answer questions (3-6) p.51
• -Read Ch4 sec1, Answer questions (2-5) p.93

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Journal 9 pt.A

• 1.) Based on the data presented by Tim Russert,
  what direction does the economy seem to be
  taking?
• 2.) What is Presidents opinion of the economy?
• 3.) What is your opinion of the American
  economy?

3
All societies face scarcity and must answer the 3
basic questions

• What to produce
• How to produce
• For whom to produce

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Types of Economic Systems

• Traditional tribal law
• Market democratic societies
• Command dictators, communist govt

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(No Transcript)
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Economics 2/10/04

• OBJECTIVE Examine how economic performance is
  evaluated.
• I. Journal 10 pt. A
• -Read Business Week Newsclip p.45
• -Answer questions (1-2) p.45
• II. Journal 10 pt. B
• -notes on economic goals
• III. Homework (due Friday the 13th)
• -Read Ch2 sec3, Answer questions (3-6) p.51
• -Read Ch4 sec1, Answer questions (2-5) p.93

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Goals of the American Economy

• Economic freedom
• Economic efficiency
• Economic equity
• Economic security
• Full employment
• Price stability
• Economic growth
• (Future Goals)

8
Economic freedom

• In the United States, people place a high value
  on the freedom to make their own economic
  decisions.
• People like to choose their own occupations,
  employers, and uses for their money.
• Business owners like the freedom to choose where
  and how they produce.
• The belief in economic freedom, like political
  freedom, is one of the cornerstones of American
  society

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Economic efficiency

• Productive resources (land, labor, capital
  entrepreneurs) are scarce and must be used in a
  way that the benefits of their use are greater
  than their costs.

10
Economic equity

• Americans have a strong sense of justice,
  impartiality, and fairness.
• Examples
• -equal pay for equal work
• -illegal to discriminate
• -advertisers are not allowed to make false
  claims
• -lemon laws (hold producers responsible for
  faulty products)

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Economic security

• Americans desire protection from such adverse
  economic events as layoffs and illnesses.
• Examples
• -unemployment insurance
• -workmans comp.
• -social security

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Full employment

• When people work, they earn income for themselves
  while they produce goods and services for others.

13
Price stability

• Price stability adds a degree of certainty to the
  future.
• If inflationa rise in the general level of
  pricesoccurs, workers need more money to pay for
  food, clothing, and shelter.
• How inflation works
• -Wendys Jr. Cheese Deluxe
• -Cost .99

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If you make 5.00

• How many Jr. Cheeses can you buy per hour?
• 5, so your purchasing power is 5 burgers per hour
• Next year you get a raise of 1, is your
  purchasing power higher this year than it was
  last year or lower?

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• You cant answer the question until you know the
  price of the Jr. Cheese.
• If the price of the Jr. Cheese goes to 1.50,
  what is the change in your purchasing power?
• Decreased by 1 burger

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Inflation Example
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• People who live on a fixed incomean income that
  does not increase even though prices go upfind
  that bills are harder to pay and that planning
  for the future is more difficult.

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Economic growth

• Growth is needed so that people can have more
  goods and services.
• Because the nations population is likely to
  grow, economic growth is necessary to meet
  everyones needs.

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Economics 2/11/04

• OBJECTIVE Examine the characteristics of
  capitalism.
• I. Journal 11 pt. A
• -read Profiles in Economics p.52
• -answer questions (1-2) p.52
• II. Journal 11 pt. B
• -notes on capitalism
• III. Journal 11 pt. C
• -minimum wage

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The Characteristics of Capitalism

• In capitalism private citizens own the factors of
  production.
• Free enterprise means that competition is allowed
  to flourish with minimum government interference.

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Competition Free Enterprise

• Economic freedom
• -people can choose their jobs, employers, and
  how to spend their money.
• -businesses may choose what to sell and how much
  to charge.
• Voluntary exchange
• -buyers and sellers freely engage in market
  transactions.

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• Private property rights
• -people may control their possessions as they
  wish
• Profit motive
• -people and organizations may improve their
  material well-being by making money
• Competition
• -producers and sellers compete with each other
  for consumers while lowering costs.
• -consumers compete with each other to obtain the
  best products at the lowest prices.

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Roles

• Entrepreneur
• -organizes land, labor, and capital in order to
  make a profit
• Consumer
• -determines what is made the customer is always
  right

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• Government
• -protector of private property, enforcer of
  contracts, and definer of fairness
• -provider of services like defense, education,
  and public welfare
• -consumer of goods
• -regulator charged with preserving competition
• -promoter of national goals

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Minimum Wage

• How does an increase in the minimum wage affect
  the economy?
• Hints Think in terms of the role of the
  government of entrepreneur

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Economics 2/12/04

• OBJECTIVE Begin analysis of the law of demand.
• I. Journal 12 pt. A
• -read Cybernomics Spotlight p.60-61
• -What reason does Dell cite for the success of
  the company?
• -Why has e-bay been successful?
• II. Journal 12 pt. B
• Notes on demand
• III. Homework

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Demand

• Demand is the desire, ability, and willingness to
  buy a product.
• In order to buy a product you have to compete
  against others with similar demands.

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Demand Schedule

• A demand schedule is a listing that shows the
  various quantities demanded of a particular
  product at all prices that might prevail in the
  market at a given time.

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Demand Curve

• Economists call this the demand curve, a graph
  showing the quantity demanded at each and every
  price that might prevail in the market.

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Economics 2/13/04

• OBJECTIVE Continue examination of the law of
  demand.
• I. Journal 13
• -Pick four of the following articles and write a
  summary on it.
• Comcast to pitch to big Disney investorsp.6C
• K-mart Laying off more of its store workers
  p.1A
• School funding fight looms p.1A
• Granholmss budget plan draws fire p.6A
• A Successful Merger p.1A
• II. Return of Ch1 Test