Transcript Notes - Ashland Independent School District

Notes
Introduction to Economics
Economic Systems
Ways we obtain the things we want and
need.
Wants – make life more comfortable (Xbox
360, $175 shoes, Candy bar, etc.).
Needs – For survival (food, shelter, water).
How we obtain things to satisfy wants and
needs sets apart types of economies.
Types of Economies
Traditional – primitive, trade, barter, grow
things we need. Ex. Native Indians in Amazon
rainforest.
Command – Government controls all economic
factors: production equip., factories, farms, etc.
Ex. Communist countries.
Market Economy – decisions made by
individual, set own prices based on market.
Opposite of Command.
Market Economy &
Its Freedoms
Freedom to Compete with other sellers.
Freedom to Own Property for a company.
Freedom to Buy and Sell as we want.
This is a Free Market.
Competition
Start a business to make money, or profit.
To make profit, must provide a good or
service, using a resource.
Limited resources = competition for those
resources = effect on prices we pay.
Resource is scarce (hard to get) and prices
rise. Think Oil.
Supply and Demand
Law of Supply – Prices go up, production
goes up. Price drops, production drops.
Law of Demand – Prices go up, consumers
buy less. Price drops, consumers buy more.
Balance to find price high enough to make
profit, low enough to interest consumers.
Free Enterprise
Run business with little interference from
Govt.
Competition causes lower prices and higher
quality.
As competition makes a healthy market,
monopolies are illegal.
Monopoly is a company with no
competition. Can set own prices and reduce
quality without consequences.
Production
Goods and Services are the things that are
produced by a group’s economy.
Goods – physical products that are
manufactured or made that can be owned.
Ex. Stereo, TV, Car, Cheeseburger.
Services – not physical, but things people
do. Ex. Doctor visit, computer repair, haircut.
Types of Services
Personal Services – haircut, makeover,
physical training, plastic surgery, brain
surgery, etc.
Repair Services – Car repair, Maytag Man,
TV repair, etc.
Other Services – Legal advise, retail,
banker, lawn mowing, etc.
Capitalism
Factors of Economy are owned by private
citizens, and allows for investment in
business of others.
Capitalism rewards risk with profit. If profit
is large, it is worth a larger risk.
Innovation is finding a new way of making,
marketing, or distributing a product. A major
risk but reaps greater profit. Example: Dell
Computers & customized to order.
Our Economy
Mixed Economy – U.S. mostly a Market
Economy, but mixes some elements of other
systems.
Businesses free to do as please, but regulations
are placed by govt. to protect citizens. Ex: Min
wage, child labor, pollution regulations.
Govt. may control prices and keep monitor
economic strength. Ex: Auto industry bailout,
subsidies for wheat farmers.
American Business
Early U.S. – economy was based on local
needs and small business.
Transportation – Wheels allowed nationwide
needs to be met. Flight allows global needs
to be met.
Growth –Some goods (Cars, oil, electric,
steel, etc.) require more space and resources
than small businesses can handle. Large
machinery.