Economy: the careful use or management of resources

such as money, materials or labor (workers).

Economic development depends on the production, distribution, and consumption of goods and services.

Production: the making of goods

Producers = owners and workers

Distribution: the passing out or selling of goods

Goods = products

Consumption: the use of goods and services

Consumers: people who buy goods and use the servicesServices: producers perform

Factors of Production - the ingredients, or elements needed for

production to occur.

Entrepreneurs- people who have the ideas that bring natural

resources, labor resources, and capital resources together to

produce goods.Natural Resources - raw materials used to make goods. (land,

water, forest, minerals, soil climate)

Labor Resources - workers needed to create goods and

services. (knowledge, skills, experience)

Capital Resources - money, buildings, machines, and

supplies needed.

IndustriesClassification Description Example Product

Agriculture Takes natural resources from the earth (mining, fishing, and farming are included)

Manufacturing

Makes products using the natural resources (construction, factories, and processing plants are included)

Wholesale The sale of goods in large quantities, as for resale by a retailer.

Retail The sale of goods or commodities in small quantities directly to consumers

Service Provides a service such as restaurants, supermarkets, hotels, hospitals, education, etc.

Economic Systems•Communism (command)- government decides what needs are to be met, found in unlimited governments

•Free Enterprise (market)– consumers decide what to produce and purchase, prices are determined by supply and demand, found in limited governments

• Socialism- some businesses and industries are controlled by the government; government provides many health and welfare benefits, found in both limited and unlimited governmentsThe main purpose of any economic system is

to produce and distribute goods and services.

Problems that all economic systems face: SCARCITYExamples:Lack of natural resourcesLack of workers(labor resources)Lack of money(capital resources)Lack of consumersLack of technology

Scarcity creates barriers to economic development.

Economic Indicators

Most common:Life Expectancy: the average age to which people in a country lives (gives clues about health care and nutrition.

Literacy Rate: shows the percentage of a country’s people who can read or write at an elementary school level.

Gross Domestic Product: the yearly average value of all goods and services produced within a country. GDP per capita (per person)

Economic Indicators are measures that show how a country’s economy is doing.

Country Life Expectancy Gross Domestic Product per Capita

Literacy Rate

Canada 81.38 $39,400 99%

Cuba 77.7 $9,900 99.8%

Mexico 76.47 $13,900 86.1%

Peru 72.47 $9,200 92.9%

Developing vs. Industrialized Developing Nations are countries with low levels of development. It is marked by few jobs in industry, poor services, low literacy rates, and low life expectancy.

Industrialized Nations are countries with high levels of development. It is marked by high quality education, advanced health care, good services, advanced technology and decent salaries.