The Basics of Economics - Mr. Tredinnick's Class · PDF fileEconomics is the study of how...
Transcript of The Basics of Economics - Mr. Tredinnick's Class · PDF fileEconomics is the study of how...
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The Basics of Economics
Wants vs. Needs Factors of Production
Scarcity Types of Economies
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Economics is the study of how people seek to satisfy their needs and wants by making
choices • For example:
– You must choose how to spend your time
– Businesses must choose how many people to hire
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Economists look at:
• Decisions made by people
• Decisions made by
businesses
• Decisions made by the
government
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Identifying want and need
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Goods Services
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Factors of Production
1. Land – Used to make goods
2. Labor – A person that does something
3. Capital – man-made things used to make other things
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Land Popping Corn Vegetable Oil
Labor The human effort needed to pop the corn
Capital Corn-Popping Device
Factors of Production
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Scarcity occurs when there are limited quantities of resources to meet unlimited needs or desires
Scarcity drives all economies: Each economic system has its own method for deciding who gets scarce resources what and how
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Traditional Economy
• Countries that use this type of economic system are often rural and farm-based.
• Also known as a subsistence economy
• a traditional economy is defined by bartering and trading
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Countries with Traditional Economies
• No Country has a pure traditional Economy
– SE Asia
– Central Asia
– South Asia
– Northern Europe
– Northern North America
– Sub-Saharan Africa
– Andean and Amazonian South America
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Command Economy
• A.K.A. – Planned Economy
• Central Government regulates certain factors of production
• the government is the final authority to take decisions regarding production, utilization of the finished industrial products and the allocation of the revenues earned from their distribution
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Countries with a Command Economy
• Cuba
• North Korea
• Myanmar
• China
• Soviet Union (No Longer Exists)