Mixed and Market Economies: Canada and the US

Mixed and Market Economies: Canada and the US Focus Question: What values shape the mixed and market economies of Canada and the United States?

Economy • Economy: The resources and processes involved in the production, distribution and consumption of goods and services • As a consumer, you are part of Canada's economy • What you own and buy reflects what you value, and also what is available for you to buy • What role do you think economic systems play in supplying you with things you use everyday?

Economics In Action • Comic time! • Turn to page 199 in your textbook and answer the questions based on the comic • You only have 10-15 minutes to complete it • If not finished, it is for homework – due next class

Scarcity • The comic “Economics in Action” shows an example of scarcity • This is when in economics, the idea that materials, labour and capital limit the supply of what people want and need • The popularity of the game, mixed with other factors, had made it scarce • What could be done about this situation? What do you believe should be done? • There are some things which we need that are limitless, for the most part – like air • Most things, however, are finite/limited

Resources • The reason for this limitation is quite simple – resources themselves are limited • Resources = money, labour, and materials • All are used to supply people what they want and need • Resources can be limited for many different reasons • Why would the availability of raspberries be limited? • Scarcity is the idea that resources are limited • Basic economic questions are about solving this issue • What is needed or wanted? • How will it be produced? • Who will get it? • How might the government get involved if people's wants and needs aren't being met?

What impacts might decisions based on using land have on the economy? Scarcity Factors • There are three basic factors that affect the supply of what people need and want • Land, labour and capital • Land = everything found in the natural environment • Includes renewable and non-renewable resources • Labour = the physical and mental effort needed to produce goods and services • Farmers, servers, construction workers, etc • Capital = the money that people have or borrow to buy other resources to produce goods and services How do choices concerning jobs affect the workforce? What if the capital used to start a business was invested in something else?

Economic System • An economic system is created to attempt to solve the problem of scarcity • There are many different ideas about how to best organize an economy – this leads to different systems • Like a political spectrum, you can put economic systems on a continuum • These positions are not static, but dynamic • They don't stay there, but often shift left or right depending on the situation • Privately Owned: In economics, the part of the economy owned and controlled by businesses and individuals • Publicly Owned: In economics, the part of the economy owned and controlled by government and paid for by taxes

Crown Corporations • A crown corporation is a company owned by Canada's government • The reasons for them are: • To provide essential services • To promote economic development • To support Canadian culture and identity • One reason Canada has a mixed economy is because of the use of crown corporations • The US has some, but not nearly as many as Canada

Case Study • Handout • Pages 205-206 and 208 in your textbook • We will read the textbook sections together and discuss and answer the questions

Market Economies • Although mixed and market economies are different, they are related • Both are affected by the individual choices of consumers • These add up to create overall economic decisions for a society • In pure market economies, consumers drive ALL economic decision making • In mixed economies, they drive a considerable amount of decision making • There are two main mechanisms of market economies • Supply and demand • Competition

Supply and Demand • Supply and Demand is a cause and effect relationship which is related to price • Supply and Demand affect quality of life because they affect the prices of products we buy, the availability of products, and jobs connected to creating products • Supply = is about producing things people want; created by producers • Producers = those who create products and services (the supply) • Demand = the wants and needs of the consumers for products and services • Consumers = those who use products and services

Q: What if the supply of a product went down? How would that affect price and demand? Q: What might cause the supply of a product to drop? Q: Why might demand for a product go up? What role might marketing play in demand?

Supply & Demand - Examples • In groups, you will look at a supply and demand scenario • You will predict what will happen to the demand, supply and price of the specified item • You will then share and discuss your example • Following this, you will go on the website below and test your knowledge through interactive supply and demand scenarios • Make sure to take a look at the graphs! • http://ecedweb.unomaha.edu/dem_sup/econqui2.htm

Competition • Competition is just like it sounds – it involves producers working to get consumers to buy their products • Products attract consumers in different ways • Price, quality, selection, etc • Many things can affect competition in an economic system • Values of consumers • Decisions by government to become involved in decisions about supply and demand

Examples of Competition • How do stores in a mall try to influence your ideas about what you need and want? • How does this connect to the variety and quality of services a mall offers? • How do government decisions that affect competition in an economy reflect values?

Government Involvement • Although market economics relies on the decisions of individual consumers, the government sometimes gets involved • This may be to inform, protect or ensure good practices by businesses • If consumers are not being fairly treated • Many governments have requirements that certain products need to contain a list of ingredients • It is illegal for producers to “fix prices” among themselves • In 2007 there was an investigation under the Competition Act • It was believed that chocolate manufacturers were fixing their prices • The objective of the act is to “maintain and encourage competition in Canada in order to . . . provide consumers with competitive prices and product choices.”

Monopoly vs. Competition • The opposite of competition is monopoly • This occurs when one producer controls all the supply of a product or service • This often occurs when the government takes control of something that is deemed an essential service • ICBC, Canadian Wheat Board • In some cases, though, the government actually intervenes to stop companies from having a monopoly • Microsoft Corporation

Mixed and Market Economies: Canada and the US