1. define economic system. 2. list and describe the three key economic questions. 3. list and...

Chapter 2 Section 1 – pgs. 23-27

1. Define economic system.2. List and describe the Three Key Economic Questions.3. List and describe the four types of economic systems.4. Using the Chart Below, describe each of the Economic Goals and Societal Values.

Then provide a real-life example of each.

Economic Goal and Societal Values

Summary Example

1. Economic Efficiency

2. Economic Freedom3. Economic Security

and Predictability4. Economic Equity5. Economic Growth

and Innovation6. Additional Goals

Economic System – method used by society to produce goods and services

Economic System

What and how much should be produced? Who should produce it? How should it be produced? Who should share in its use?

Four Economic Questions

http://www.sodahead.com/entertainment/who-is-the-most-patriotic-performer/question-1373165/

1. Traditional economy – relies on habit, custom, or ritual to decided the 3 economic questions

2. Market economy – economic decisions are made by individuals and are based on exchange, or trade.

3. Command Economies – in a centrally planned economy, the central government alone decides how to answer the three economic questions.

4. Mixed Economies – market-based economic systems in which government plays a limited role.

Four Economic Systems

Economic Goals and Societal Values - pgs. 23-27Economic Goal and Societal Values

Summary Example

1. Economic Efficiency

2. Economic Freedom

3. Economic Security and Predictability

4. Economic Equity

5. Economic Growth and Innovation

6. Additional Goals

Making the most of scarce resources

Manufacturer knowing the best way to use resources wisely (Assembly Line)

Freedom from government intervention in the production and distribution of goods/services

Working where you want, spending money the way that you want, owning a business, etc.

Knowing that goods and services will be available, payments made on time, government will provide a safety net in times of economic downturns

Security – Unemployment Checks, Social SecurityPredictability – gas at gas pumps, food at store

Fairness, being paid according to your skill level, not being discriminated against

Lawyers earn more than nurses, computer programmers more than truck drivers

Economic growth refers to improving standard of living and GDP. Innovation, improving existing technology.

Agricultural age to industrial age to information age. Innovations in computers, communication.

Future goal for society. Environmental protection, full employment, universal medical care.

Review Economic GoalsStatements Economic Goal

1. Last week I willingly enrolled in college courses at Coastal. I am so happy that I make my decisions about my future.

2. My uncle lost his job, but thankfully he is able to receive unemployment checks.

3. Wal-Mart recently upgraded all of their registers to touch screen monitors.

4. General Motors replaced all of their human workers with robots in order to increase productivity.

5. As a result of the internet and technology, our economy has experienced significant expansion over the past 30 years.

6. I can always expect Publix to have the food I like!

7. Hopefully in the future we will have full employment.

8. With every degree/skill I earn, I improve my ability to make money.

1. Economic Freedom

2. Economic Security

3. Economic Innovation (Efficiency)

4. Economic Efficiency (Innovation)

5. Economic Growth (Innovation)

6. Economic Predictability

7. Additional (Future) Goals (Equity)

8. Economic Equity (Growth)

Economic Efficiency

Description: Using the factors of production in the most productive way possible, as to maximize profit

Picture Summary: This picture represents assembly line production at an automobile manufacturing plant.

This shows how the division of labor and specialization can increase efficiency.

Economic Goals and Societal Values Poster Project – pgs. 26-27Poster Requirements:1. Title - Economic Goals and

Societal Values2. Summary Statement – “The

Economic Goals and Societal Values provide a basic framework for each society and their attempts to provide for their people.”

3. 8 pictures to represent each of the economic and social goals.

4. Label, describe and summarize each picture

1. Economic Efficiency2. Economic Freedom3. Economic Security 4. Economic Predictability5. Economic Equity6. Economic Growth7. Economic Innovation8. Additional Goals

Economic Goals and Societal ValuesSummary Statement:

The Economic Goals and Societal Values provide a basicframework for each society and

their attempts to provide fortheir people.

Economic EfficiencyDefinition: societies try to maximize

the factors of productionPicture:This picture represents an efficient use of resources through

assembly line production

Economic Security

Economic Growth

Economic Equity

Economics Goals and Societal Values Poster Project pg. 23 - 27

Economic Freedom Additional Goals

Economic Innovation

Economic Predictability

Poster Requirements:1. Title - Economic Goals and Societal Values2. Summary Statement – Purpose of economic and Societal Values3. At least 8 pictures to represent each of the Economic Goals and Social Values4. Label, definition and picture description for each of the 8 Economic Goals and Societal Values

Daily Assignment Chapter 2 Section 1 – pgs. 23-27

Bead Game Simulation

1. How does a traditional economy answer the three economic questions?

2. Describe traditional economies and their communities.

3. What is a disadvantage to a traditional economy?

4. How are the three economic questions answered in a market economy?

5. What are other names for market economies?

6. How are the three economic questions answered in a command economy?

7. Why are they referred to as command economies?

8. Why are most modern economies referred to as mixed economies?

Chapter 2 Section 1 – Daily Assignment Questions pgs. 26 -27

Chapter 2 Section 2 Imagine that you are walking into Walmart.

List 3 items that you could purchase and the departments that you would find them in.

Market – buyers and sellers meet to exchange goods and services Market Economy – economic decisions(what to produce, how to

produce, for whom to produce) are made by consumers and businesses based on exchange of goods and services

Capitalism (free market) – Individuals and businesses own the factors of production and can profit on them

Voluntary Exchange - is the act of buyers and sellers freely and willingly engaging in market transactions

Chapter 2 Section 2 – The Free Market

Specialization Specialization – the separation of tasks within a

system; people focus on a specific purpose/task Division of Labor – Workers perform fewer tasks

in order to operate more efficiently

Household – Person or group of people living in a residence Consumers - use the goods and services (outputs) to

satisfy wants and needs Firm – business, organization that uses resources to

produce a product, which it then sells Suppliers – transform “inputs” (F.O.P.) into “outputs”

(products)

Households and Firms

Product Markets – Houses and firms interact; producers sell their goods and services to consumers Households are buyers of goods and services Firms are sellers of goods and services (outputs)

Product Markets

Factor Markets – the markets where productive resources (F.O.P)/Inputs are bought and sold Labor - Firms (businesses) hire workers and pay them

salaries Land - Purchased/rented land Capital - Use money from households, purchase capital

goods

Factor Markets

Circular Flow Model of Economic Activity – shows the flow of money and goods/services from and to businesses and households

Households Firms

Factor Market

Product Market

Consumer Spending

Consumer Goods and Services

Final Goods and Services Sold

Business Income/Revenue

Land, Labor, Capital - provided by household Inputs for Production

(F.O.P.)

Payment for F.O.P. – Rent (Land) Wages (Labor), Interest (Capital), Profit (Entrepreneurs)

Income to Households/Individuals

Households• Buy and Consume

Goods and Services• Own and sell

the F.O.P

Firms(Business)• Produce and sell

Goods and Services• Hire and use F.O.P.

Product Market

• Market for Goods

and Services• Firms sell

Households Buy

Factor MarketMarket for

F.O.P• Households

sell• Firms buy

Application Questions1. In the factor market, what do businesses provide households?2. The flow of goods and services in the product market is represented by which

firm and products on the model below?3. When you apply for a job at the local Starbucks which market are you in?4. Which color arrows represent the flow of money; what color arrows represent

the flow of inputs and outputs.

Income/payment the F.O.P

Starbucks/CoffeeFactor

Blue/Tan

Circular Flow Model of Economic Activity

Households Firms

Factor Market

Product Market

Consumer Spending/Investing

Goods and Services Purchased: Caramel Frappuccino

Goods and Services Sold


Land, Labor, Capital, Entrepreneurs Inputs for

Production (F.O.P.)

Payment for F.O.P. – Wages, rent, capital goods


Daily Assignment - Circular Flow Model of Economic Activity

Household1. ________________________

FirmFirm 1. _____________________________

Firm 2. _____________________________

Factor Market

Product Market

Consumer Spending

1. _________________________

Goods Purchased

1. ______________________________

2. _______________________________

Goods Offered1. ___________________________

2. ___________________________

Business Income

1. _________________________

Factor of Production Offered

1. ___________________________

Input for Production

1. ___________________________

Payments for F.O.P

1. _________________

Weekly Income

1. __________________

"Winning is not a sometime thing; it's an all the time thing. You don't win once in a while; you don't do things right once in a while; you do them right all the time. Winning is a habit. Unfortunately, so is losing. There is no room for second place. There is only one place in my game, and that's first place. I have finished second twice in my time at Green Bay, and I don't ever want to finish second again. There is a second place bowl game, but it is a game for losers played by losers. It is and always has been an American zeal to be first in anything we do, and to win, and to win, and to win. Every time a football player goes to play his trade he's got to play from the ground up-from the soles of his feet right up to his head. Every inch of him has to play. Some guys play with their heads. That's O.K. You've got to be smart to be number one in any business. But more importantly, you've got to play with your heart, with every fiber of your body. If you're lucky enough to find a guy with a lot of head and a lot of heart, he's never going to come off the field second.

Vince Lombardi “What it Takes To Be Number 1”

Running a football team is no different than running any other kind of organization-an army, a political party or a business. The principles are the same. The object is to win-to beat the other guy. Maybe that sounds hard or cruel. I don't think it is. It is a reality of life that men are competitive and the most competitive games draw the most competitive men. That's why they are there-to compete. To know the rules and objectives when they get in the game. The object is to win fairly, squarely, by the rules-but to win. And in truth, I've never known a man worth his salt who in the long run, deep down in his heart, didn't appreciate the grind, the discipline. There is something in good men that really yearns for discipline and the harsh reality of head to head combat. I don't say these things because I believe in the "brute" nature of man or that men must be brutalized to be combative. I believe in God, and I believe in human decency. But I firmly believe that any man's finest hour, the greatest fulfillment of all that he holds dear, is that moment when he has worked his heart out in a good cause and lies exhausted on the field of battle - victorious."

...Vince Lombardi

Vince Lombardi “What it Takes To Be Number 1”

1. Do you agree with Vincent Lombardi’s assertion that people are born with the desire to compete why or why not?

2. What areas do you see competition in the economy of the United States ?

3. How is competition beneficial to our economy/society?

4. How is it harmful to our economy/society?

Competition Article

Competition Competition – efforts among sellers/producers to

attract consumers at various prices At the heart of market economic philosophy

Incentive – an expectation that encourages people to behave in a certain way (positive and negative) Businesses respond to profits Consumers respond to price change (high/low)

1. What was Adam Smith’s ethnic and professional background?

2. What was the name of the book that he published; when was it published?

3. What did Smith identify in the book?

4. What did he assert about specialization and division of labor?

5. What did he believe about the role of government in the economy?

6. Define the French term Laissez Faire; why did Smith believe in Laissez-Faire economics?

7. What is meant by his metaphor of the Invisible Hand?

8. How do both consumers and businesses benefit from this philosophy?

Chapter 2 Section 2 – Daily Assignment Economic Profile Adam Smith pgs. 33

- Fill in the blanks for each of the following:1. QB Peyton Manning’s high salary, vs. a cashier’s

low salary, represents economic _________.2. Moving from the personal computer to handheld

devices represents an economic _________.3. “Today, I know Chevron will have gas” represents

economic ___________.4. GM receiving a government bailout represents

economic ____________.5. Increasing the production of goods, services and

jobs would represent economic ________.

Word Bank: innovation, predictability, growth, security, equity.

Economics Daily Ten #2

equity

innovation

predictability

security

growth

Command – central authority owns and operates the Factors of Production

Centrally Planned Economy – central government answers the three economic questions; WHAT to produce, HOW to produce, and FOR WHOM to produce Oppose private property, free market pricing, economic

freedom

Chapter 2 Section 3 – Centrally Planned Economies

Karl Marx – German social philosopher that studied economic systems in Europe

Communist Manifesto – written by Marx and Frederick Engels became basis for modern-day command economies

Thought capitalism would fail because it put to much wealth in the hands of few and left everyone else poor

Believed in a “no-class” system, where all share in wealth/power Socialism – distribution of wealth and F.O.P. equally amongst society Communism – political and economic system with centralized economic

decision-making Authoritarian Government – exact strict obedience from their citizens; do not

allow individual freedom

Socialism and Communism

Economics Daily Ten #41. Why does a free market economy need some government

intervention?a. so that the government has total control over factor resourcesb. to ensure the government has the freedom to tax as necessaryc. to make sure that the government can fulfill its needs for goods and servicesd. to provide for things that the marketplace does not address (i.e. market failures)

2. In what kind of economy does the government make all the decisions?a. socialistb. laissez fairec. centrally planned, or command economyd. free enterprise

Explanation: (d) – most modern economies are mixed, or have some government involvement to regulate, protect and oversee.

Explanation: (c) – command economies are controlled by a dictator, or small group of economic policy makers.

Explanation:

Explanation:

1. How did the Soviet Union arise?2. Where did Soviet planners allocate the

factors of production?3. How did the Soviet Union control

agriculture?4. What three industries did Soviet Planners

favor?5. How did the Soviet Union view

entrepreneurial endeavors?6. What was the quote used by Soviet

consumers as a joke?7. Why were Soviet Consumers’ left

unsatisfied? Page 39 – Russia in Crisis8. How did many Russians initially respond

to the Communist collapse?9. What happened over the next decade?10. How did Russia deal with corruption?11. What were some characteristics of

Russia’s financial problems?12. What evidence can be seen that success

is in sight?

Chapter 2 Section 3 – Daily Assignment Questions “The Former Soviet Union” pgs. 36-38

Do Now Ch 2 Section 3 Scenario 1You have two cows.You trade one to your neighbour for a bull.You only produce what you need to survive. Scenario 2You have two cows.The State takes both and gives you just

enough milk to live Scenario 3You have two cows.You sell one and buy a bull.Your herd multiplies, and your wealth grows.You sell your herd and retire on the income.

1. What economic system matches each scenario?

2. Which scenario do you think is the most ideal and why?

3. Which scenario do you think sounds the most like the United States? Why?

4. What countries do you know of that could fall into scenario 2.

Free Enterprise – competition in the marketplace is allowed to flourish with no interference from government

Modified Free Enterprise (mixed economy) – businesses are free to compete with some government regulation/intervention

Chapter 2 Section 4 – Modern Economies

North Korea

Cuba

Iran

China

Mexico France

South Africa

Poland Japan

United Kingdom Hong Kong

Canada Singapore

United States

Centrally Planned Free Market

Laissez Faire – no government intervention in the economy Some government intervention is necessary in the economy;

some needs are difficult to answer in the marketplace National defense, roads and highways, education, etc… Government acts a protector, regulator and overseer of

economy

Laissez Faire in a Modern Economy

Taxes from both households and businesses Income, state, social security, Medicare/Medicaid,

unemployment insurance, etc.

Government Money

Government purchases land, labor, and capital from households

United States gov’t pays 2.8 million employees $9.7 billion for labor

Government in the Factor Market

Government purchases goods and services from firms (businesses) Buildings, office supplies, telephones, computers, etc.

Government in the Product Market

Daily Assignment – Economic GoalsEconomic Goals Market Command Tradition

Economic Efficiency Yes - High levels of economic freedom

No - Many aspects of economic activity are tightly controlled and state-dominated

No - Extremely limited, a person’s role in society is based on custom, heritage and tradition

Economic Freedom

Economic Security


Economic Equity

Economic Growth

Economic Innovation

Daily Assignment – Economic GoalsUsing the Chart Below, identify how each of the economic goals are addressed.

Economic Goals

Market Economy

Command Economy

Traditional Economy

Economic Freedom

Yes - High levels of economic freedom

No - Many aspects of economic activity are tightly controlled and state-dominated

No - Extremely limited, a person’s role in society is based on custom, heritage and tradition

Economic Efficiency

Economic Security


Economic Equity

Economic Growth

Economic Innovation


Economic Goals

Market Command Tradition

Economic Efficiency

Highly stressed because of scarcity and competition

Lack of profit motive can lead to a lack of efficiency

Slow to adapt to new ideas/technology. Inefficient by standards of modern societies

Economic Freedom

High levels of economic freedom

Many aspects of economic activity are tightly controlled and state-dominated

Extremely limited, a person’s role in society is based on custom, heritage and tradition

Economic Security


Economic Equity

Economic Growth

Economic Innovation


Economic Goals


Economic Efficiency




Economic Freedom




Economic Security

Safeguards In society, but general employment is not assured

Economic security is assured based on full employment and government sponsored programs

Economic security is assured based on traditional means of production


Economic Equity

Economic Growth

Economic Innovation


Economic Goals


Economic Efficiency




Economic Freedom




Economic Security





High predictability Lack predictability because government controls F.O.P.

Predictable in most cases. Can be unpredictable, because F.O.P. are controlled through traditional means

Economic Equity

Economic Growth

Economic Innovation


Economic Goals


Economic Efficiency




Economic Freedom




Economic Security







Economic Equity Fairness (hiring and payment) is a primary goal of a market economy

Lack of equitable payments based on the production of goods and services

Equity is based on customary means of production, women have assigned roles, men have assigned roles

Economic Growth

Economic Innovation


Economic Goals


Economic Efficiency




Economic Freedom




Economic Security










Economic Growth

Grow at a fast rate due to competition and profit motive

Lack of growth because of a lack of efficiency and profit motive

Lack of growth due to a lack of productivity and innovation

Economic Innovation


Economic Goals


Economic Efficiency




Economic Freedom




Economic Security










Economic Growth

Grow at a fast rate due to competition and profit motive

Lack of growth because of a lack of efficiency and profit motive

Lack of growth due to a lack of productivity and innovation

Economic Innovation

Innovation is at a high rate due to changes in the marketplace and competition

Less incentive to innovate because profits and credit go to the state

Innovation is non-existent by modern standards

Daily Assignment – Comparing Economic SystemsTradition Command Market

1.

2.

3.

1.

2.

3.

1.2. 3.4. 5. 6.7.8.9.

1.

2.

1.

2.

1.2. 3.4. 5. 6.

1.

2.

1.

2.

3.

4.

5.

1.

2.

3.

4.

Adv

anta

ges

Dis

adv

anta

ges

Exa

mpl

es

1. Traditional Economy

2. Command Economy

3. Market Economy

4. Market

5. Free Market

6. Specialization

7. Division of Labor

8. Household

9. Consumer

10.Firm

11. Supplier

12.Product Market

13.Factor Market

14.Centrally Planned Economy

15. Socialism

16. Communism

17. Authoritarian

18. Laissez-Faire

Chapter 2 – VIS Terms

Junk!!!

Due Wednesday 9 - 81. DAQ's pg. 26-27, Ch. 2 Sec. 1

2. Video Questions - North Korea

3. Comparing Economic Systems, Advantages + Disadvantages Economic Systems + Reflection Questions

4. D.A. Circular Flow Model

5. Circular Flow (Elisa and Marcella)

6. Online Assignment - Scarcity

7. Ch. 2 Sec. 2 D.A. Adam Smith

8. Ch. 2 Sec. 3 D.A. "The Former Soviet Union"

9. Economic Goals and Am. Free Enterprise Flow Chart

10. Chapter 2/3 Study Guide

11. Ch. 2 CW Puzzle

12. Ch. 3 CW Puzzle

13. Ch. 2 Notes

14. Daily Tens (12)

15. Vocab Terms

Junk!!!

Circular Flow Model of a Mixed Economy

HouseholdsFirms

Factor Market

Product Market

Consumer Spending/Investing

Goods and Services Purchased:

Goods and Services Sold


Land, Labor, Capital, Entrepreneur

Inputs for Production (F.O.P.)

Payment for F.O.P. – Wages, rent, capital goods


Taxe

sTaxes

Expenditures

Expenditures

Taxe

s

Taxes

EF3b

26. EF3b: From the principle of voluntary exchange, we conclude that:a. often buyers are made better off at the expense of sellersb. often sellers are made better off at the expense of buyersc. both the buyer and the seller must be better off as a result of a transactiond. neither the buyer nor the seller are necessarily made better off as a result of a transaction

27. EF3b: The concept that people may decide what

and when they want to buy and sella. voluntary exchangeb. fraudulent exchangec. competitiond. economic integrity

Study Guide Chapter 2/31. Economic System

2. What to produce, Who to produce them for, How to produce them

3. Economic: efficiency, freedom, security, predictability, equity, growth, innovation, additional goals

4. Tradition, custom, ritual, habit

5. Central planners dictate the what, how, for whom

6. Households and firms through production and consumption

7. Market

8. Market economy

9. Capitalism

10. Households and Firms

11. Input is something used to produce and output, which is a final good or service

12. Product

13. Factor

14. Adam Smith, Wealth of Nations

Study Guide Chapter 2/315. Be limited in its role in the economy, “Let

them do as they please”.

16. Invisible Hand

17. See Circular Flow

18. a) Productb) when it changed hands from the household to the

firm

c) Factor, labor

d) Grills, hostesses, cashiers

e) Factor

19. Karl Marx, Communist Manifesto

20. That it would fail because it put too much money in the hands of the rich and not in the hands of the poor

21. Communism, Socialism

22. Authoritarian

23. Economic Freedom

24. Property Rights

25. Profit Motive

26. Voluntary Exchange

27. Competition

Study Guide Chapter 2/328. Their purchases signal to producers

what to produce (consumer sovereignty)

29. Overseer, protector, regulator, informer

30. Technology

31. Public Good

32. Public

33. Private

34. Free Rider

35. Market Failure

36. Externality

1. Give an example of specialization/division of labor, and explain why it is beneficial.

2. Give an example of a positive and negative externality not mentioned on the test.

3. Explain why the United States is not a true “pure market/free enterprise” system.

Extra Credit

1. define economic system. 2. list and describe the three key economic questions. 3. list and...

Documents

economic security

economic freedom

economic goals

economic efficiency

economic equity

key economic questions

types of economic systems

services economic system