Chapter 3.1

0422.9.4 Identify the resources (factors of production) that are used to satisfy wants and needs.

0422.9.5 Explain how scarcity affects the availability of economic goods and services.

0422.9.9 Explain what an economy is. 0422.9.10 Discuss advantages and disadvantages of

different types of economic systems. 0422.9.11 Discuss how an economic system addresses the

questions (what is to be produced, how it is to be produced, and for whom).

The organized way a nation provides for the needs and wants of its people

How a nation uses its resources

All the things used to produce goods and services

LandLaborCapitalEntrepreneurship

1. LandEverything contained in the earth or

found in the seasCoal ClimateCrude Oil GeographyFishTrees and Plants

2. LaborAll people who work

Full-time and part-timeWell-educatedWell-trained

3. CapitalMoney to start and operate a

businessGoods used in productionBuildings and factoriesTools and computersRaw materials that have been

processed into more useful form Infrastructure

The physical development of a country

Roads and PortsSanitation and UtilitiesTelecommunications

4. EntrepreneurshipThe skills of people who are willing to

invest time and money to run a business

Organize factors of production to create goods and services

Employers

List one of each type of resource that is used in the production of the following goods and services.

Automobiles Land Labor Capital

Potted plants Land Labor Capital

Hair Cut Land Labor Capital

Automobiles Land – ore to produce steel for auto

frames Labor – production line workers Capital – production line robots

Potted plants Land – potting soil Labor –nursery employees/gardeners Capital -- greenhouses

Hair Cut Land –salon/shop site Labor – hairdresser/barber Capital – scissors, combs, hairdryers

Which resource – land, labor or capital is the most important to a nation’s economic success? Explain the reasons for your choice.

The difference between the wants and needs and available recourses

Unlimited wants and needs for growth and development

Limited resourcesForces Nations to make Choices

What or Which goods and services should be produced?

How should the goods and services be produced?

For whom should the goods and services be produced?

Traditional EconomyTraditions and rituals answer the

basic questionsAnswers often based on cultural or

religious practices and ideals that are passed from generation to generation

Market Economy or Free Enterprise System

No government involvement in economic decisions

What to produce? – Consumers decide How to produce? –

Business/competitive For whom to produce? – people with

money

Command EconomyThe government makes economic

decisionsWhat to produce? – dictator or

central government decidesHow to produce? – government owns

means of productionFor whom to produce? – government

decides

Mixed Economies – no pure traditional, market or command economies

United States – mixed economy leaning toward market economy

Government involvement through laws and regulations Protect food, air and water, unsafe

products Labor laws – age and minimum wage Social programs – welfare and Medicaid

Profit is the driving force in a market economy.

What element takes the place of profit in a command economy?

How well does this alternative work?

Make a T-Graphic for each political philosophy (Capitalism, Communism and Socialism)

One side of the graphic will list the advantage of the political philosophy

The other side of the graphic will list the disadvantages of the political philosophy

CapitalismAssociate with democracyPolitical power in hands of peopleMore than one political partyFree to elect candidatesMotive for producing goods and

services is to sell them for a profitUnited States and Japan

CommunismAuthoritarian government controls

factors of productionNo private ownership of property or

capitalTheory – goods owned in common

(by government) are available to all as needed and society is classless

No unemployment – assigned jobsGovernment decided education

neededHousing assigned as neededFood & housing prices subsided to

keep lowMedical care is free

No financial incentive to increase productivity

Food shortagesSubstandard medical careCuba, North Korea, China

China allowing more free enterprise practices

SocialismSystem on its way to the communist

ideal of a classless societyToday most have democratic

political institutionsMain Goal: meet basic needs for all

and to provide employment for many

Cradle to GraveMedical Care and Education is free or

low costPension system and elderly careBusinesses and individuals pay high

taxesGovernment runs key industriesCanada and Sweden

Privatization – government selling state owned businesses

InfrastructureEducated labor forceForeign investments

Political power in hands of peopleFree elections/free to elect candidate

of your choice/you can run for office More than one political partyProfit is the motive for

business/productivity

UnemploymentNo guaranteed pensions Medical costs not subsidizedEducation costs not subsidized

Free medical careFree educationSubsidized housing costsSubsidized food costsNo unemployment

No private ownership of property No productivity incentive Government often assigns jobs Government controls factors of

production Substandard medical care Food shortages Government decides education needs Government decides housing needs

Designed to meet basic needs of citizens

Designed to provide employment to all

Medical care is free or low costEducation is free or low costElderly Care (Cradle to Grave

coverage)Pension system

Services paid for by high taxes on individuals and businesses

Government runs key industriesHealth care can have long waiting

lists

Explain why the United States economy is considered a mixed economy.