Post on 31-Dec-2015
Economics Boot Camp
By Ms. Chastain
Explain the role of business in society
To create goods and services for consumers
Profits are (hopefully) earned that then circulate money throughout the economy.
Distinguish between economic goods & services
Goods – tangible (you can touch it)› Ex. Car, cell phone, pencil
Services – intangible (you can’t touch it)› Ex. Haircut, Car Wash, Yard Work
Explain the concept of economic resources
Land: natural resources› Ex. Trees, lakes, coal
Labor: HUMANS working› Ex. Cashier, Teacher
Capital: tools, machinery, robots, etc.› Ex. Cash register, lawn mower,
computer Entrepreneurship: owning a business
› Ex. Truett Cathy (owner of Chic-fil-A)
Describe the concepts of economic scarcity and economic activities
Scarcity – lack of resources (or not enough stuff)› Fundamental problem of economics
Must be able to distribute scarce resources using different methods› Rationing/Coupons› Money
Explain the principles of Supply and Demand
Demand – what consumers are willing to purchase at all available prices› Law of Demand – if the price increases, quantity
demanded decreases, and vice versa
Explain the principles of Supply and Demand cont.
Supply – what producers are willing to sell at all available prices› Law of Supply: if prices increase, quantity
supplied increases, and vice versa
Explain the types of economic systems
Traditional economic system: based on customs, rituals, and habits› Usually run by an elder, chief, or medicine
man› Jobs are handed down from family members› Do not like change – severe punishment for
change› Ex. Amish, Alaskan/Canadian Inuits,
Australian Aborigines
Explain the types of economic systems cont.
Command Economic System: controlled by a central authority› Usually communist or socialist› Run by a dictator, authoritarian
government, or totalitarianism› Jobs are chosen by the government
system› Ex. Cuba, North Korea
Explain the types of economic systems cont.
Market Economic System: people are allowed to control the system› Usually a democracy style government system
› May be led by a President or central government group but they are chosen by the people
› Ex. United States, England, Japan
Determine the relationship between government and business
Free Enterprise System: businesses are allowed to run freely without much (or any) government control
Modified Free Enterprise System: businesses have a lot of freedom but the government regulates prices, goods sold, services provided, etc.
Explain the concept of private enterprise
Private Enterprise: Able to own a businesses without much interference from government›Usually able to sell whatever you wish, hire whomever you want, etc.
Identify factors affecting a business’ profit
Consumer Sovereignty: consumers choose all prices, what is sold, how much is sold etc.
Market Failures: a breakdown in the market causing a business to possibly fail› Negative/Positive Externalities: not
involved in the situation but affected anyways Ex. An airport expands = creates new jobs (positive), pollution/traffic/noise (negative)
Determine factors affecting business risk
Can be hard to get loans Hard to find reliable business
partners Hard to find reliable employees Location Competition Hard to actually earn a profit
› Inputs may be too expensive
Explain the concept of competition
Two or more businesses competing for customers, sales, profit, etc.
Explain the concept of productivity
Want to use the least amount of inputs to create the most amount of outputs› Ex. Lemonade Stand
Cheap lemons, sugar, water = Inputs
Sell a lot of lemonade for as high a price possible = Outputs
Explain the concept of productivity cont.
Division of Labor: one of the best ways to achieve productivity› Divide up jobs so workers perform fewer tasks
› Ford created the assembly line for this purpose