Download 06- Economics and Types of Economies

EOC Review
Civics and Economics
Economics Basics
& Types of
Economies
Civics and Economics EOC
Review
•What is
Economics?
Civics and Economics EOC
Review
• The study of how we
make decisions in a
world where resources
are limited.
Civics and Economics EOC
Review
•What is scarcity?
–What is an example of
something that is scarce?
Civics and Economics EOC
Review
• Scarcity occurs when
we do not have enough
resources to produce
all the things we would
like to have.
– Examples?
Civics and Economics EOC
Review
• What are needs?
• What are wants?
Civics and Economics EOC
Review
• Needs are required for
survival.
• Wants are things we
would like to have.
Civics and Economics EOC
Review
•What is an
economic
model?
Civics and Economics EOC
Review
• An economic model is a
representation of the real
world that is used to
explain how the economy
works or to predict what
might happen if the
economy changes.
Civics and Economics EOC
Review
•What is a tradeoff?
Civics and Economics EOC
Review
• Tradeoff– Alternative you face if you decide to
do one thing rather than another.
Civics and Economics EOC
Review
•What is
opportunity cost?
– What may be an example?
Civics and Economics EOC
Review
• Opportunity cost is the
cost of the next best
use of your time or
money.
– Examples?
Civics and Economics EOC
Review
•What types of
costs do
businesses
incur?
Civics and Economics EOC
Review
• Fixed Costs– The same no matter how many units
produced.
• Variable Costs– Expense that changes with the
number of units produced.
Civics and Economics EOC
Review
• Total Cost
– Fixed + Variable = TOTAL
• Marginal Costs
– Extra, additional cost of producing
one additional unit of output.
Civics and Economics EOC
Review
•What is revenue?
Civics and Economics EOC
Review
• Revenue is money
coming in.
Civics and Economics EOC
Review
•What is the cost
benefit analysis?
Civics and Economics EOC
Review
• It compares marginal
costs with marginal
benefits of a decision.
– Which do you want to be higher?
Cost or benefit?
Civics and Economics EOC
Review
•What is a
market
economy?
Civics and Economics EOC
Review
• An economic system
where supply, demand,
and prices help people
make economic
decisions.
Civics and Economics EOC
Review
•What is capitalism?
•What is free
enterprise?
Civics and Economics EOC
Review
• Capitalism– A system where private citizens own most,
if not all, of the means of production.
• Free Enterprise– Businesses are allowed to compete for a
profit with minimum government
interference.
Civics and Economics EOC
Review
•What are
incentives?
Civics and Economics EOC
Review
• Rewards offered to try
and persuade people to
take certain economic
actions.
Civics and Economics EOC
Review
•What are the 4
Factors of
Production?
Civics and Economics EOC
Review
• Natural Resources– “gifts of nature”
• Labor– Both physical and mental.
• Capital– Tools used to make other products
• Entrepreneurship– Individuals that start new businesses,
introduce new product and improve
managementCivics
techniques.
and Economics EOC
Review
•What are goods?
•What are services?
Civics and Economics EOC
Review
• Goods- tangible
products
• Services- work done
for someone else
Civics and Economics EOC
Review
•What is Gross
Domestic
Product?
Civics and Economics EOC
Review
• GDP; total value in $ of
all the final goods and
services produced in a
country.
– What is a final good?
Civics and Economics EOC
Review
•What is the
difference between
product and factor
markets?
Civics and Economics EOC
Review
• Product markets– Where producers offer goods and services
for sale.
– Consumers spend their income here.
• Factor markets– Where resources are being bought and
sold.
– Consumers earn their income here.
Civics and Economics EOC
Review
• What is productivity?
• What is the division of
labor?
Civics and Economics EOC
Review
• Productivity- when scarce
resources are used
efficiently.
• Division of labor- breaking
down of job into smaller
parts.
– Becoming specialized.
Civics and Economics EOC
Review
•Consumer
sovereignty
refers to what?
Civics and Economics EOC
Review
• The consumer is
“king” or ruler of the
market.
Civics and Economics EOC
Review
•What is competition?
•What is the profit
motive?
Civics and Economics EOC
Review
• Competition– Struggle between buyers and sellers
to get the best products at the lowest
price.
• Profit motive– driving force that encourages people
to improve their material well being.
Civics and Economics EOC
Review
• Who was Adam Smith?
What were his
economic philosophies
based on?
Civics and Economics EOC
Review
• Scottish economist and
philosopher.
• Adam Smith wrote Wealth
of Nations.
– Laissez-faire economics- government
should not interfere in the market place.
Civics and Economics EOC
Review
•Who are
consumers?
Civics and Economics EOC
Review
• We are all consumers.
Civics and Economics EOC
Review
• What is disposable
income?
• Discretionary income?
Civics and Economics EOC
Review
• Disposable income– Money a person has left over after
taxes paid on it.
• Discretionary income– Money left over after paying for
necessities.
– Can satisfy our wants.
Civics and Economics EOC
Review
•What is
interest?
Civics and Economics EOC
Review
• Payment people
receive when they lend
money.
Civics and Economics EOC
Review
• What are imports?
• What are exports?
Civics and Economics EOC
Review
• Import = good
purchased from
another country.
• Export = good sold to
another country
Civics and Economics EOC
Review
•What are market
economies?
Civics and Economics EOC
Review
• Look back on your
sheet!
Civics and Economics EOC
Review
•What are
command
economies?
Civics and Economics EOC
Review
• the individual has little, if
any, influence on
economy.
• Major decisions all made
by central government.
• They “command”
Civics and Economics EOC
Review
• What is communism?
• What is socialism?
Civics and Economics EOC
Review
• What is socialism?
– Believe production should be owned and
controlled by society, directly or indirectly
through the government.
– Wealth would ideally be distributed equally among
all citizens.
• What is communism?
–
–
–
–
One class of people.
All property held in common
No need for a government
Developed by Karl Marx
Civics and Economics EOC
Review
•What are
Mixed
economies?
Civics and Economics EOC
Review
• Combines basic
elements of market and
command.
Civics and Economics EOC
Review
•What countries
today might have
a command
economy?
Civics and Economics EOC
Review
• North Korea
• Cuba
– China and Russia are still
transitioning to market economies.
Civics and Economics EOC
Review