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Economics
Vocabulary
Economy• A system for
producing, and
distributing
goods and
services to fulfill
peoples wants
(needs).
Vocabulary
Capitalism • Free Enterprise or Free
Market
• A type of economic
system where the
individual decides how
goods and services will
be produced and
distributed.
• Little to no government
control of the economy.
Vocabulary
Socialism• A type of economic
system where the
government controls the
major industries in a
country (electric
companies, oil, health
care).
• The government decides
how these goods and
services will be produced
and distributed. Some
private ownership is
allowed.
Vocabulary
Communism• The government owns
and controls all the
production of goods and
services.
• There is no private
ownership, everything is
owned collectively by the
people and the
government decides who
gets what and who can
use what.
Cuban Flag
Vocabulary
MoneyAnything that is accepted as
payment for goods and services.
Vocabulary
SupplyThe amount of a
product made and
sold in an
economy at a
certain price.
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DemandAmount of
people who
want to buy a
good or
service at a
certain price.
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Securities,
stocks and
shares• Ownership in a
business or
corporation.
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Buyer-
A person who
is willing to
buy goods at
a certain
price.
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Seller-
A person willing
to sell a good
or service at a
certain price.
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GoodsPhysical
products that
can be bought
or sold.
Example, food,
clothes, car.
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ServicesWork that you will
pay another
person to do for
you.
Example- Fix your
car, go to a
doctor, take care
of your yard.
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InvestTo place your
money into
business, the
stock market or
other areas of the
economy where
you hope your
money will make a
profit
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BudgetA plan for how
you will spend
and save
money
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ProfitsThe money you have
left over after you
subtract what it
cost you to make
something from
what you were able
to sell it for.
Seller’s cost - Buyer’s cost = Profit
What is an economy?
• An economy is a system for
producing, and distributing
goods and services to fulfill
peoples wants (needs).
• You must have human
wants in order to have an
economy.
• Everyone wants something.
Human Wants?
2 types of wants that an economy
helps to provide:
1. Physical- Food, water, oxygen,
shelter, clothing. Items that keep you
alive.
2. Emotional- love, feel good about
yourself, happy.
Factors of Production
The resources that
produce the goods and
services that satisfy
people’s wants.
Factors of Production
LAND
Soil, minerals,
water, animals,
plants that grow on
the Earth.
Basically it is all of
the Earth’s natural
resources.
Factors of Production
LABOR -
The time and
energy it
takes
people to
produce
goods and
services.
Factors of Production
CAPITALIs anything that can
be saved and used
to produce other
goods and
services.
Examples- tools,
machinery, or
money.
Test Yourself
1. An ______________ is a system, in which
goods and services are produced, and
distributed to satisfy peoples’ wants.
2. Name the three (3) factors of
production.
____________________ _____________________
_____________________
3. The three factors of production are
combined together to make _____________
and ______________ to satisfy people’s
wants.
Test Yourself
1. An ECONOMY is a system, in which
goods and services are produced, and
distributed to satisfy peoples’ wants.
2. Name the three (3) factors of
production.
LAND, LABOR AND CAPITAL
3. The three factors of production are
combined together to make GOODS and
SERVICES to satisfy people’s wants.
Types of Economies
1. Traditional
2. Command
• Socialism
• Communism
3. Market
• Capitalism
4. Mixed
Types of Economies
1. Traditional
•
•
An economic
system based on
traditions and
customs.
Most traditional
economies are
found in less
developed
countries of the
world.
Types of Economies
2. Command
• The government or
central authority
decides how the
factors of
production will be
used.
• Many command
economies are
found in
dictatorships.
Command Economy
•
This theory was started
by Karl Marx and
Friedrich Engel and
includes:
1. Communism
All factors are owned by
the government
1. Socialism
Wealth should be
distributed equally
Types of Economies
3. Market
• In this type of economy private
individuals decide how the factors
of production are used, and how
goods and services are produced
and distributed.
• - There is little or no government
control of the economy.
• - It is based on competition for
profits.
Types of Economies
4. Mixed
•
•
A combination of
different types of
economies.
- ExampleCapitalism and
Socialism.
Test Yourself
1. ___ One of the two creators of communism
2 . ___ This type of economy has little or no private
ownership of property, and the factors of
production
are owned collectively.
A. Adam Smith
B. Traditional
C. Karl Marx
D. Communism
E. Social ism
F. Capitalism
3. ___ How the factors of production are used
in this type of economy are based on customs and traditions
4. ___ Author of The Wealth of Nations.
5. ___ Type of economy where the government controls the
major industries in the country; and provides many services
for the people, but this comes with very high taxes.
6. ____In this type of economy the individual controls
the factors of production and decides how they will be used.
--------------------------------------------------------------------------------------------7. Why is America considered a mixed economy?
Test Yourself
1. C
One of the two creators of communism
2.D
This type of economy has little or no private
ownership of property, and the factors of
production
are owned collectively.
A. Adam Smith
B. Traditional
C. Karl Marx
D. Communism
E. Social ism
F. Capitalism
3. B How the factors of production are used
in this type of economy are based on customs and traditions
4. A Author of The Wealth of Nations.
5. E Type of economy where the government controls the
major industries in the country; and provides many services
for the people, but this comes with very high taxes.
6. F In this type of economy the individual controls
the factors of production and decides how they will be used.
--------------------------------------------------------------------------------------------7. Why is America considered a mixed economy? ALTHOUGH WE ARE
PRIMARILY A MARKET (CAPITALISM) ECONOMY, WE HAVE SOME
SOCIALISM IN THE FORM OF WELFARE AND SOME OTHER PUBLIC
SERVICES.