Transcript Economics – the study of human efforts to satisfy seemingly unlimited resources

Economics – the study of human
efforts to satisfy seemingly unlimited
wants through the use of limited
resources
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All economic systems must make three choices
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1. What and how much should be produced
2. How goods and services should be produced
3. Who gets the goods and services produced
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Capitalism
Socialism
Communism
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System in which freedom of choice and
individual incentive for workers, investors,
consumers, and business enterprises is
emphasized
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1. Private ownership and control of property
and economic resources
2. Free enterprise
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The opportunity to control one’s own economic
decisions
3. Competition among businesses
4. Freedom of choice
5. The possibility of profits
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Concepts that laid the foundation for
capitalism
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People could work for economic gain
Wealth should be used aggressively
Major changes – nation-states, trade, and
rising middle class
Ideas of progress, invention, and free market
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Buyers and sellers were free to make unlimited
economic decisions in the marketplace
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Author of The Wealth of Nations
Described capitalism and from his writings and
others came the term laissez-faire
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Laissez-faire to let alone or government should keep
their hands off the economy
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An economic system based on private
ownership of the means of production – the
capital – and on individual freedom
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In theory a free enterprise or pure market economy ,
economic decisions are made by buyers and sellers
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Competition plays a key role - sellers compete for
resources – consumers for products - workers wages
and salary
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The U.S. Government is the country’s largest
buyer of goods and services
The government has increasingly regulated the
economy for various purposes
The Great Depression led to many social and
economic programs
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An economy in which free enterprise is
combined with and supported by government
decisions in the marketplace.
Government keeps competition free and fair
and protects the public interest
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Government owns the means of production,
determines the use of resources, distributes the
products and wages, and provides services
such as education, healthcare and welfare.
Combined with government socialism can be
democratic or totalitarian
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An economic system in which the central
government directs all major economic
decisions (state socialism or command
economy)
Karl Marx – Author of The Communist Manifesto
and Das Kapital
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Marx
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Advocated violent revolution
Thought capitalist system would collapse
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Marx believed that in industrialized nations the
population is divided into capitalists or the
bourgeoisie who own the means of production, and
the workers, or the proletariat who work to produce
the goods.
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He believed the workers would rise up in violent
revolution and overthrow the cpitalists
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The goal was government ownership of the
means of production and distribution
One class of people would evolve and property
would be held in common
There would be no need for government and it
would disappear and socialism would evolve
into communism