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Basics of Economics
Transcript of Basics of Economics
Found in rural, non-developed, and/or third world countries
Economic decisions are defined by elders and customs.
Tradition - doing things the same way year after year
Men & women have specific roles
Concerned with subsistence (self sufficient) & basic survival
Agrarian economy - hunting and gathering type of culture
Amish, Indian Tribes, Vanuatu, Pygmies of Cong, Eskimos, Belarus
Government is in full control (or dictates) what is produced and how it is priced.
Also known as a planned or managed economy.
Command economies vary from a strong command Examples: China, Cuba, France, and Sweden.
Mix of Market & Command
Government takes care of people's needs.
Market takes care of their wants.
Competition is present in the marketplace.
Examples: United States, England, Australia
Is the study of how
seek to satisfy
of others through incentives, choices, and allocation of scarce resources.
Traditional Economy in Alaska
FREE ENTERPRISE or MARKET Economy
There are 4 basic Economic Systems
This is an idea of a perfect economy, but does not exist.
Supply & Demand of goods & services determine the price.
This generates competition within the marketplace.
Most economic systems that consist of Free Enterprise are mixed with Command.
Producers strive to create the best goods and services on the market to eliminate competition.
An economic system like this could promote illegal business practices and could create a serious break between the rich and the poor
Equal standard of living for everyone because the government oversees and distributes the necessities of life such as healthcare, national security, social reforms and school systems.
Fewer choices in the marketplace because government controls who enters. Also, there is less competition in the market, therefore some items are unavailable.
Military in Russia
Private economic freedom; centralized economic planning; freedom to buy, sell and possess; government provided services for public good (Social Services); and governmental safeguards (FDA, EPA, USDA).
Taxes must be paid for government services, governmental restrictions (laws & regulations).
4 Types of Resources
land, crops, & minerals
used to produce goods & services.
labor that people put forth
to produce the goods & services.
Examples: workers & supervisors.
- money and man-made items (machines & buildings) needed to produce the goods & services.
- the person(s) with the business skills to use the top 3 resources to provide the goods/services in the market. Examples: computer skills, communication skills, etc.
Scarcity - when a resource is limited
Customer - person who
Consumer - person who
Other terms you should know:
goods, services, needs, wants,
The Wheel of Economics
People work and get paid with taxes taken out
Businesses produce goods/services
Taxes go to government
Government uses tax money to help others, roads, schools, public safety, etc.
People purchase goods/services based on needs & wants
- when the economy
down so that everyone is affected.
The economy declines and the GDP declines two quarters in a row.
Gross Domestic Product
- how an
economy is measured (in $).
What is the
of government in US economic system?
determine the products that are produced and sold. (
This means that the government allows anyone to create a business as long as laws are followed. The government has a limited role in what we can buy and sell whatever we want as long as it is legal. However, the government does play a large role in the sale of foods, legal drugs, environment, etc. for consumer safety.