BASIC ECONOMICS

1
BASIC ECONOMICS

• Arctic Survival (Round 1)
• Arctic Survival (Round 2)
• Economics Decision Making
• Economic Systems
• US Economic System
• Adam Smith
• Circular Flow Model

2
ARCTIC SURVIVAL(BASIC ECONOMICS)

• Arctic Survival (Day 1)
• What problems did you encounter in Round 1?
• A lack of tools time
• Could not satisfy the needs for survival
• An abundance of needs wants and a limited means
  to satisfy them. (scarcity)
• What did you need in order to survive?
• Paper, pencils, rulers, etc (economic resources)
• Types of Resources Factors of Production
• natural/land, human/labor, capital,
  entrepreneurship
• Organized system of production was needed
  (economic system)
• The study of how people use their scarce
  resources to satisfy their wants and needs
  (economics)

3
ARCTIC SURVIVAL(BASIC ECONOMICS)

• Arctic Survival (Day 2)
• What basic problem did you try to solve in Round
  2?
• How to produce food, clothing, shelter with
  limited resources
• 3 Basic Economic Questions
• 1. What to produce?
• 2. How to produce?
• 3. For Whom to produce it?
• How did you organize in Round 2 to increase
  production?
• A worker, or group of workers, concentrates on
  one task to increase productivity (division of
  labor)
• The ability to produce a greater quantity of
  goods in better and faster ways (productivity)
• The relationship among people that makes the
  actions of one necessary for the well-being of
  others (interdependence)
• How did you decide what groups to form and what
  work individuals would do?
• Who took control?

4
Economics Decision Making

• Why study economics?
• Helps analyze the impact of decisions and
  strengthen decision making.
• How does scarcity impact an individual?
• Forces individuals to make decisions. Raises
  awareness of the need to conserve.
• Trade-Off deciding to do one thing instead of
  another.
• ex government decides to spend more on
  education, must cut money from another program,
  or increase taxes.
• Opportunity Cost the sacrifice that is made, or
  what you give up to do or have something else.
• ex government in above decision, the
  opportunity cost is the money which must be
  taken from another program, or increased taxes
  that must be collected from citizens.

5
Economic Systems

• How do societies decide what to produce?
• need something a person must have to survive
• (food, clothing, shelter)
• want something not necessary for survival,
  but desire to have.
• good something that is tangible, having been
  produced
• service something intangible, done to help
• Economic Systems
• capitalism/market economy a system in which
  there is little to no government involvement.
  (private individuals control)
• command economy a system in which the
  government controls the factors of production,
  and makes all economic decisions
• mixed economy a system in which there is a
  combination of two or more economic systems (ex
  US mixed market)
• traditional economy a system in which economic
  decisions are based mostly on customs.

6
US ECONOMIC SYSTEMGoals Characteristics

• Goals of the US Economy
• Provide jobs
• Efficient use of resources
• Continued economic growth
• Equal access to jobs and education
• Characteristics of the US Economy
• Private property
• Profit incentive
• Competition
• Freedom of choice
• Freedom of enterprise
• Limited government involvement

7
ADAM SMITH

• The Wealth of Nations
• Wealth of Nations written by Adam Smith, book
  provided a basic outline of the economic theories
  embedded in a market economy.
• (Invisible Hand) A free market while appearing
  chaotic and unrestrained is actually guided to
  produce the right amount and variety of goods.
• (supply, demand, and competition)
• (Laissez-Faire) the idea that the government
  should not interfere with the economy. The
  Invisible Hand will regulate the economy,
  government influence will decrease productivity.

8
CIRCULAR FLOW MODEL