Economics

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Economics
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Scarcity

• A word economists use to describe the conflict
  between peoples desires and limited resources.
• The foundation for all economics.

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Economic System?

• The way in which a nation uses its resources to
  satisfy peoples needs and wants.
• Every economic system has to answer three basic
  questions
• What will be produced?
• How will it be produced?
• For whom will it be produced?

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Economic Systems

• Market System Citizens and businesses make most
  economic decisions. Government plays a limited
  role.
• Ex. U.S., Canada, Mexico, U.K.
• Command System Government decides how many of
  which goods are produced and sets the price.
• Ex. Communist governments (North Korea and Cuba).

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Economic Systems cont.

• Traditional System social roles and culture
  determine how goods and services are produced,
  what prices and individual incomes are, and which
  consumers are allowed to buy certain goods.
• Ex. Familys status may determine whether they
  can own a tractor.
• Mixed System Mixes elements of two systems.
• Ex. India has features of both market and
  traditional economies.

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Gross Domestic Product

• GDP gross domestic product tells the total
  value of the goods and services that a country
  produces each year. This is one way to measure a
  countrys economy.
• https//www.cia.gov/library/publications/the-world
  -factbook/rankorder/2004rank.html

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Four Factors of Production

• Natural Resources raw materials such as land,
  water, forests, and minerals.
• Human Capital workers with skills and
  experience to make goods or provide services.
• Capital Resources machines, factories, and
  supplies
• Entrepreneurs People who bring natural
  resources, labor resources, and capital resources
  together to produce goods and services.

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Factors of Production for a Music CD
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Elements of a Market System

• Consumers the people who use goods and services
  in a market economy.
• Supply number of items offered at each price.
• Demand number of items that people will buy at
  each price.
• Profit money that remains after the costs of
  producing a product are paid.
• Competition rivalry among businesses to sell
  goods to consumers and make the greatest profit.

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What happens if there is more demand than supply??

• Too much demand without enough supply does what
  to prices of goods?
• Wii?
• i-Phone?

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What happens if there is more supply than demand??