What is the Basic Economic
Problem?
Factors of Production Circular Flow Chart Market Economy Command Economy Mixed Economy Economics
Economic Systems and Resources
Factors of Production Circular Flow Chart Market Economy Command Economy Mixed Economy Economics
Economics
– study of society; analyzes
production, distribution, consumption of
goods/services
Economics Factors of Production Circular Flow Chart Market Economy Command Economy Mixed Economy Human Resources
Capital Resources
Entrepreneurial Resources Natural Resources
Factors of production
– all components
necessary to produce a society’s goods/services
Economics Factors of Production Circular Flow Chart Market Economy Command Economy Mixed Economy Human Resources
Capital Resources
Entrepreneurial Resources Natural Resources
Natural Resources
– raw
materials found in nature
Renewable –
can
be
reproduced
Nonrenewable –
can’t
be
reproduced
Economics Factors of Production Circular Flow Chart Market Economy Command Economy Mixed Economy Natural Resources
Human Resources
Entrepreneurial Resources Capital Resources
Human Resources
– knowledge, efforts, and skills
people bring to their work, also called labor
Skilled, unskilled
Economics Factors of Production Circular Flow Chart Market Economy Command Economy Mixed Economy Human Resources
Natural Resources
Entrepreneurial Resources Capital Resources
(Real)Capital Resources
– things used to produce
goods/services, like buildings, material & equip.
Not capital, as in money (money is financial capital)
Ex: Delivery truck, supermarket
Economics Factors of Production Circular Flow Chart Market Economy Command Economy Mixed Economy Human Resources
Capital Resources Natural Resources
Entrepreneurial Resources
Entrepreneurial Resources
– the initiative to
improve goods and services or create new ones
Factors of Production Market Economy Command Economy Mixed Economy Economics Circular Flow Chart
Sue and Andrew decide to set up a
smoothie bar at school as a
fund-raiser for their track team: What
Four Factors of Production are
Factors of Production Market Economy Command Economy Mixed Economy Economics Circular Flow Chart
3 Basic Economic Questions all
nations and societies must answer!
1) What should be produced?
2) How to produce?
Factors of Production Market Economy Command Economy Mixed Economy Economics Circular Flow Chart
The Nation’s or Society answer to the 3
economic questions is determined by its
economic System!
1) Market Economy
2) Command Economy
3) Mixed Economy
Factors of Production Market Economy Command Economy Mixed Economy Economics Circular Flow Chart
Building the Bridges to a sustainable Recovery
•
Read Article
•
Underline/highlight key points
•
Write a summary of the article in your own words, incorporating 6 of
the following vocabulary Words:
•
Scarcity
*Human Resources
•
Opportunity cost
*Entrepreneurial Resources
•
Natural Resources
*Capital Resources
Factors of Production Circular Flow Chart Command Economy Mixed Economy Economics Market Economy
Supply, Demand & Equilibrium Supply & Demand Graph Marketplace
Capitalism
Market economy
– system in which economic
decisions are made in the marketplace according
to the laws of supply & demand
Factors of Production Circular Flow Chart Command Economy Mixed Economy Economics Market Economy
Supply, Demand & Equilibrium Supply & Demand Graph Capitalism
Marketplace
Marketplace - anywhere money exchanges hands
Factors of Production Circular Flow Chart Command Economy Mixed Economy Economics Market Economy
Supply & Demand Graph Marketplace
Capitalism
Supply, Demand & Equilibrium
Supply
– amt. of goods/services that producers
will provide at various prices
Demand
– amt. of goods/services that consumers
are willing to buy at various prices
Equilibrium price
–price at which the amt.
supplied = amt. demanded
Factors of Production Circular Flow Chart Command Economy Mixed Economy Economics Market Economy
Supply, Demand & Equilibrium Marketplace
Capitalism
Supply & Demand Graph
P = Price
Factors of Production Circular Flow Chart Command Economy Mixed Economy Economics Market Economy
Supply, Demand & Equilibrium Supply & Demand Graph Marketplace
Capitalism
Capitalism
– (also called private enterprise system)
market economy system in which resources are
privately owned
Own your home, land, business
Minimal gov’t control
Factors of Production Circular Flow Chart Market Economy Mixed Economy
Economics Command Economy
Socialism Advantages Communism
Disadvantages
Command Economy
– system in which a central
authority such as the state makes the key
Factors of Production Circular Flow Chart Market Economy Mixed Economy
Economics Command Economy
Communism– a strong command economy where
the state makes all the economic decisions
Ex: Vietnam, China, Cuba
Socialism Advantages Communism
Factors of Production Circular Flow Chart Market Economy Mixed Economy
Economics Command Economy
Socialism– a moderate command economy where
there is some form of private enterprise
Ex: France, Sweden
Socialism Advantages Communism
Factors of Production Circular Flow Chart Market Economy Mixed Economy
Economics Command Economy
Advantages
Equal standard of living
State provides job, place to live, healthcare
Goods/services distributed evenly
State provides utilities, transportation, defense
Less poverty
Socialism Advantages Communism
Factors of Production Circular Flow Chart Market Economy Mixed Economy
Economics Command Economy
Socialism Advantages Communism
Disadvantages
Disadvantages
Little choice of what to buy
Luxuries often unavailable
Prices & wages fixed by state
Skilled workers often earn the same as unskilled
workers
Factors of Production Circular Flow Chart Market Economy Command Economy
Economics Mixed Economy
Mixed Economy
– combination of a market &
command economy
State takes care of people’s needs, while the
marketplace takes care of people’s wants
