Chpt 2.notebook
September 24, 2012
Objectives:
At the end of this unit students will be able to:
• Identify and explain the significance of the following terms: Economic System, traditional economy, command economy, market economy, market, circular flow of input and output, mixed economy, capitalism, Laissez­faire, free­enterprise system, profit, profit incentive, competition, private property, economic efficiency, economic equity, economic growth, standard of living, Socialism, communism, democratic socialism, authoritarian socialism.
• Write a brief essay connecting these ideas to their personal life.
• Prove a connection between these ideas from the textbook and current events taking place locally, nationally, or globally. 1
Chpt 2.notebook
September 24, 2012
Economic Systems: ­ The way that a nation determines how to use its resources to satisfy its needs and wants
3 Questions to be answered by the economic system
What should be produced?
­ Trade­offs, Production Possibilities Curve, etc.. How should it be produced?
­ Decisions must be made as to what the best possible combination of available inputs will be to get the job done for the lowest possible cost. (skilled/unskilled labor, invest in capital improvements for production to become more efficient but your cost is higher initially, etc..)
For whom should it be produced?
­ There is always a limited number of available products due to scarce resources, how will the product be distributed to the consumer?
• Price Systems
• Majority Rule
• Lottery
• First Come, First Serve
• Share Equally (if this is remotely possible, examine education in the US)
• Military Force
• Many other different ways
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Chpt 2.notebook
September 24, 2012
4 Types:
Traditional Economy
­ Economic Decisions are based on customs and beliefs that have been handed down from generation to generation (the 3 questions are answered the way that they have always been answered, change is not welcome) • Advantages? Family and Community ties are strong, you know what is expected from you in life
• Disadvantages? Change is not welcome, never improve..
• Examples of this system? Inuit, Aborigines, and other small groups globally who have not modernized
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Chpt 2.notebook
September 24, 2012
Command Economy
­ The government controls all of the factors of production and, therefore, make all decisions about their use. • Advantages? That's a great question, are there any according to US views?
• Disadvantages? No incentive to work hard or to show inventiveness, not a lot of choice in products, no choice in career
Examples of this system? North Korea, Parts of China(mostly mixed today)
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Chpt 2.notebook
September 24, 2012
4 Types Continued:
Market Economy (Capitalism/ Laissez Faire)
­ Economic Decisions are made by individuals looking out for their own best interests. • Advantages? People have freedom to make economic decisions that make them happy
• Disadvantages? In pure market the too young, too sick, or too old to work will not get taken care of unless private or public institutions step in. Examples of this system? Vocabulary: Market­ voluntary exchange of goods and services between buyers and sellers
Circular flow of income and output­ economic model that pictures income as flowing continuously between businesses and consumers.
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Chpt 2.notebook
September 24, 2012
Mixed Economy
­ System that combines characteristics of more than one type of economy. Usually this is Command and Market today but not necessarily so. • Advantages? People have freedom to make economic decisions that make them happy up to issues of public health and safety. This is where government regulation will step in. • Disadvantages? What is necessary to product public health and safety? This is a pretty grey area that can lead to a very involved government.
Examples of this system? The US, China, GB, etc..
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Chpt 2.notebook
September 24, 2012
Characteristics of the US Economy
Free Market Vocabulary
Free­Enterprise System­ Individuals are free to own and control the factors of production
Freedom of Choice­ Buyers not sellers, make decisions about what should be produced
How does this work?
Profit­ the amount left after all the costs of production have been paid. The desire to make this profit is the motivation for entrepreneurs to produce new goods and services­ Profit Incentive (ex. Iphone 5)
Competition­ rivalry among producers or sellers of similar goods and services to win more business.
Private Property­ anything that is owned by individuals and not the government
Entrepreneurship Assignment
Today in the lab you will be conducting research on a possible business that you could start up as a teenager. This means that you need to make sure that you can run it around your school day as well as the other activities that you are involved in. To complete this exercise correctly you need to make sure to answer the following questions;What are your start up costs(what do you need to start your business)? How much time would you need to devote to the business? Who are your target customers? Would you be able to turn a profit and if so how long would it take to turn a profit?
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Chpt 2.notebook
September 24, 2012
Goals of Free Enterprise Vocabulary
Economic Efficiency: Wise use of available resources to obtain the greatest benefits possible.
Economic Equity: The attempt to balance an economic policy so that everyone benefits fairly
See also: Economic Freedom, Security, and stability page 49 of textbook
Standard of Living: the material well­being of an individual, group, or nation measured by how well their necessities and luxuries are satisfied.
Economic Growth: expansion of the economy to produce more goods, jobs, and wealth.
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Chpt 2.notebook
September 24, 2012
Standard of Living Individual Research Assignment:
You must pick one of the following assignments to complete as research in the lab. After conducting your research write a single page response to the prompt explaining your decision on the prompt and why. Provide evidence of the research that you conducted during class in your response.
Prompts:
1.
Research the concept of “middle class.” Who decides what middle class is? Is there a general agreement on just what it means to be in the middle class? Report your findings with various explanations you find for “middle class.” Why is there no definitive answer?
2.
Would you rather be a rich person living in the year 1900 or a middle­class person in America today? Explain in an essay, or produce a collage slide show demonstrating those differences by juxtaposing rich people living in 1900 and middle class people living today.
3.
Interview your parents and other relatives. Are their lives better or worse today than they were when they were growing up? What information can they provide that demonstrates their answer?
4.
How hard is it to get a job in your community? Are any businesses hiring part­time or fulltime workers? Survey neighboring businesses to find out what is required of new workers. Are any skills necessary in order to get a job? Is there on­the­job training? What is the starting pay? Are there possibilities for promotions? Raises? Do you think you could “make it” if you had to work to provide for yourself?
5.
Research products and services that the typical middle­class American family can afford today that were either not available at all in 1970 or only available to the rich. Are there any products or services that were available that they could afford then but not now?
6.
How many millionaires are in America? How has that number changed over the past 50 years? Why? How many of them inherited their money rather than earned it? What other statistics can you find about millionaires in America.
7.
Research the price and features of a new computer from 20 years ago. What was the cost? How much RAM and hard drive capacity did the computer have? Was the average middle class person able to afford this? What does this tell you?
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Chpt 2.notebook
September 24, 2012
Socialism: ­ a system in which the government owns the major factors of production and attempts to manage output and the distribution of goods.
Proletariat: term Karl Marx used to refer to workers
Bourgeoisie:In Marxist theory, a member of the property­owning class; a capitalist
Marx believed that Capitalism would ultimately collapse and Communism (a system in which not government was necessary) would rise to take its place. This has never happened, instead countries have claimed to be heading for communism (from each according to his abilities, to each according to his needs) but instead formed socialist countries of the following nature.
Democratic Socialism: system that works within the constitutional framework of a nation to elect socialists to office, the government usually controls only some areas of the economy.
Authoritarian Socialism: system that supports revolution as a means to overthrown capitalism and bring about socialist goals; the entire economy is controlled by a central government; also called communism.
For further information on these concepts see Figure 2.4 Pure Socialism as well as read The Change from Capitalism to Socialism According to Marx.
What if any positives can you see in a Socialist System,Communist?
What if any negatives can you see in a Socialist System,Communist?
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Chpt 2.notebook
September 24, 2012
Capitalism: ­ a system in which the individual owns the major factors of production and attempts to manage output and the distribution of goods.
What if any positives can you see in a Capitalist System?
What if any negatives can you see in a Capitalist System?
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