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ECONOMICS. ECONOMICS. Economics - The social science that deals with the production, distribution, and consumption of goods and services. Resources – Things needed to make or obtain goods and services. ECONOMICS. Goods and Services. - These are things people want.

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ECONOMICS

Economics - The social science that deals with the production, distribution, and consumption of goods and services.

Resources – Things needed to make or obtain goods and services.


ECONOMICS

Goods and Services

- These are things people want.

Goods - are physical things you can see and touch.

- Food- Clothing- Cars - Houses


ECONOMICS

Goods and Services

Services – are things people do for others.

- doctors- teachers- engineers- mechanics- lawyers


ECONOMICS

Goods and Services

Marketplace – A name for whenever people buy, sell, or trade goods and services.

- Limited resources create a Scarcity, or not enough goods and services.

- People will always want more of something they can’t get.


ECONOMICS

Production

Produced – Every good or service must be made. This is why they call it production.

- You can put all of the types of resources that need to be produced into four categories:

- Land, Labor, Capital, & Entrepreneurship.


ECONOMICS

Production

Land – (Natural Resources) things found in nature that are used in the production of goods.

- minerals- water- plants- soil- animals- timber- oil


ECONOMICS

Production

Labor – The physical and mental work of people do to make goods or provide services.

- All goods and services involve some human labor. Automated factories needs workers to design, build, and operate the machinery.


ECONOMICS

Production

Capital – Money, buildings, machinery, and tools used to make goods and services.

- Machines- Tools- Railroads- Trucks- Planes


ECONOMICS

Production

Entrepreneurship – The skills to manage a business and the willingness to take risks in starting a business. Land, Labor, and Capital are all combined and organized.

- Sometimes is the owner of the business and invests money to make a profit.- Sometimes hires a manager to help run the business.


ECONOMICS

Production

- Resources for production are available in different amounts in different parts of the world.

- The United States, Europe, and other developed countries have a great amount of capital and entrepreneurship.- Developing countries often have large, poorly educated populations that provide inexpensive labor.


ECONOMICS

Supply and Demand

Economy – How nations, businesses, and individuals make and buy things. It is also how they save and spend money.

Economists – People who study the economy.


ECONOMICS

Supply and Demand

- All wants and needs cannot be satisfied for everybody, all the time. Society must make choices by asking:

- What should be produced?- How should it be produced?- Who gets what is produced?


ECONOMICS

Supply and Demand

Opportunity Cost – The opportunity you give up to other things when you make a choice.

Example: You want to buy either an iPod or a book. You decide to buy the iPod. The opportunity cost is the book you could have bought.


ECONOMICS

Supply and Demand

Scarcity – People have unlimited wants but there are limited resources. Otherwise people will want more of what they can’t get.

- There are not enough goods and services available to meet everyone’s needs at the same time.


ECONOMICS

Supply and Demand

Consumers – People who buy goods and services to satisfy their needs and wants.

- Typically when businesspeople and economists talk about consumers they are talking about people as individuals or households purchasing goods and/or services.


ECONOMICS

Supply and Demand

Demand – How much of a good or service people are willing and able to buy at a particular price.

Demand Curve – Line on a graph that shows the quantity of something consumers would be willing to buy at different prices.


ECONOMICS

Supply and Demand (Graph)

Supply

Demand

Price of an iPod

Supply of an iPod


ECONOMICS

Supply and Demand

Supply – Goods or services that are available.

Supply Curve – Line on a graph that shows the quantity of something that a producer is willing and able to sell at different prices.


ECONOMICS

Supply and Demand (Graph)

Supply

Demand

Price of an iPod

Supply of an iPod


ECONOMICS

Supply and Demand

Market-Clearing Price– The price where consumers’ demand and producer’s supply are about the same.


ECONOMICS

Supply and Demand (Graph)

Supply

Demand

Price of an iPod

Market-Clearing Price

Supply of an iPod


ECONOMICS

Supply and Demand

- If supply increases, but demand stays the same, the price will fall.

- If supply decreases, but demand stays the same, the price will rise.

- If demand increases, but supply stays the same, the price will rise.

- If demand decreases, but supply stays the same, the price will fall.


ECONOMICS

Supply and Demand

Price – The amount you pay for a good or service.

- Price is determined by supply and demand.

- The best price is where the demand curve crosses the supply curve.


ECONOMICS

Supply and Demand

Other things that affect Supply & Demand:

- The amount of money we can spend.

- Changes in people’s taste, preferences, and attitudes.

- What we expect in the future.

- The prices of goods and services.

- The cost of production.


ECONOMICS

Competition

Free Market Economy – Property, resources, and the control of business belong to the individual owners. The United States is a free market economy.

- People are free to take the risk of their businesses succeeding or failing.


ECONOMICS

Competition

Compete – In Economics, going against another business or businesses to get consumers to purchase their product.

- In the real world, competition is imperfect. There are many factors that can affect prices.


ECONOMICS

Competition

Discounted – Giving a lower price for buying a larger amount.

Incentive – Encouragement for business to do something to keep prices low.

- Most of the time, competition keeps prices low. Sometimes though, it causes a disadvantage.


ECONOMICS

The World Market

Interdependence– Nations depend on other nations for many goods and services.

Imports – Goods brought into the United States from other countries.

Exports – Goods sold to other countries from the United States.


ECONOMICS

The World Market

International Trade– The buying and selling of goods among nations.

Absolute Advantage – One country does better than another country because of:

A. Locations

B. Climate

C. Natural Resources


ECONOMICS

The World Market

Example: Columbia’s soil and climate give it an absolute advantage over the U.S. for growing coffee beans.


ECONOMICS

The World Market

Comparative Advantage– What a country does better than other things the country can do.

Example: Columbia is more efficient at growing coffee beans than growing wheat.


ECONOMICS

The World Market

- Nations export items in which they have an absolute or a comparative advantage.

- Trade is determined by:

A. Geographical Location

B. Politics

C. Natural Resources


ECONOMICS

The Role of Government

- Even though the United States is a free market system, the government still regulates markets by controlling the overall economy, making sure products are safe, and collecting taxes.

Regulate – Making rules and watching over to protect the consumers.


ECONOMICS

The Role of Government

Public Sector – Part of the marketplace where the government makes or purchases goods and services for the people.

Private Sector – Business and their customers trade privately-owned goods and services.


ECONOMICS

The Role of Government

Public Works – Making highways, bridges, and government buildings.

- The state and local government pay for schools, poor families to help pay for living expenses and food, and prisons.


ECONOMICS

Consumers’ Choices

Trade-offs – Losing one item and in return gaining another item.

- Consumers look at price, purpose, quality, brand name, and appearance when thinking about buying a certain product.


ECONOMICS

Producers’ Choices

Wholesale – When producers sell to businesses.

Retail – When businesses sell to consumers.

- Producers look at demand, competition, resources, production, and distribution when considering what goods and services to offer.


ECONOMICS

Producers’ Choices

Profit – Money left over when the cost of resources is subtracted from the money made selling the business’s product.

- This is why businesses want to keep the opportunity cost low.


ECONOMICS

Other kinds of Economies

Command Economy – The government controls the prices, production, and labor.

- Some countries who have this type of economy:

- Cuba

- North Korea


ECONOMICS

Other kinds of Economies

Mixed Economy – The government has more control over production than in a market economy. However, private ownership and entrepreneurship still exist.

- Some countries who have this type of economy:

- Norway, Sweden, & Canada


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