What is an economy
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WHAT IS AN ECONOMY?. Journal Topic. What is an economy? Save as: 1_lastname_firstname_U2J1. Georgia Performance Standard. MKT-MP-2: Integrate social studies skills into marketing, sales and service to obtain an understanding of customers and the economic environment in they function.

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WHAT IS AN ECONOMY?

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What is an economy

WHAT IS AN ECONOMY?


Journal topic

Journal Topic

  • What is an economy?

  • Save as: 1_lastname_firstname_U2J1


Georgia performance standard

Georgia Performance Standard

MKT-MP-2: Integrate social studies skills into marketing, sales and service to obtain an understanding of customers and the economic environment in they function.


Economy or economic system

Economy or Economic System

The way a nation makes choices. These choices involve how the nation will use its resources to produce and distribute goods and services.


Resources

Resources

  • All things used in producing goods and services

  • Factors of Production – the technical term economists use for resources


Resource 1 land

Resource 1 – Land

  • Everything on the earth in its natural state / the earth’s natural resources

  • Resources Include:

    • Everything contained in the earth or found in the sea

    • Coal and crude oil are examples

    • A lake and all the living

      things in the lake are

      also examples


Resource 2 labor

Resource 2 – Labor

  • All the people who work in the economy

  • Labor includes:

    • Full and Part-time Workers

    • Both the Public and the Private sector


Resource 3 capital

Resource 3 - Capital

  • The money needed to start and operate a business

  • The goods used in the production process

  • Examples are:

    • Factories

    • Office Buildings

    • Computers

    • Raw materials that are processed

      into a more useful form (lumber, steel)


Resource 4 entrepreneurship

Resource 4 - Entrepreneurship

  • The skills of the people willing to risk their time and money to run a business

  • Entrepreneurs organize the other factors of production to create the goods and services desired in an economy


Infrastructure

Infrastructure

  • The physical development of a country

  • Things necessary for production and distribution of goods and services

  • Parts of the infrastructure include

    • Roads

    • Ports

    • Sanitation Facilities

    • Utilities


Scarcity

Scarcity

The difference between wants and needs and the resources available to meet these needs is called Scarcity.

Nations have unlimited wants and needs but limited resources – Scarcity forces the nations to make economic choices.


The basic economic questions

The Basic Economic Questions

  • Nations must answer 3 basic economic questions when deciding to use their limited resources

  • The way nations answer these questions define their economic system

    • What goods and services should be produced?

    • How should the goods and services be produced?

    • For whom should the goods and services be produced?


What should be produced

What Should Be Produced?

  • Consumers decide what is to be produced through purchases made in the market place.

  • Items that satisfy the customer’s needs and wants are purchased making the products successful

  • Items that do not satisfy the needs and wants of the consumer are not purchased and are not successful


How should goods and services be produced

How Should Goods and Services Be Produced?

  • How products will be produced is left up to the business

  • Businesses must be competitive

  • Businesses must produce quality products at lower prices than their competitors

  • Businesses must find the best way to produce goods and services

  • Businesses must also find the best way to encourage customers to purchase their products


For whom should goods and services be produced

For Whom Should Goods and Services Be Produced?

  • Those individuals with the most money are able to purchase more goods and services

  • To obtain money individuals work and invest


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