Cultural Characteristics

Economic Geography and Natural Resources

It’s the Economy…

Economic System: the way in which the people of a country produce, get, and use goods and service.

Per Capita Income: measures how much money per person a country or region earns.

Liechtenstein

$118,000

Qatar

$103,500

United States

$47,000-10th

Canada

$39,300

United Kingdom $36,600

Japan

$34,200

Mexico $14,200

World $10,400

Iraq

$4,000

Afghanistan

$800

Zimbabwe

$200

Types of Economies

Traditional Economy: an economy based on the idea where everything is set by customs, religion, belief or habit.

“This is what my grandfather did and what his grandfather did…”

In a traditional economy, Michael would cut lawns because that is what his family does. His customers would be the children of his father’s customers. His price would be set relatively close to what his father charged.

Types of EconomiesMarket Economy: an economy in which the

allocation of resources is determined by the laws of supply and demand.

We may also call this a Free Enterprise system.

In a market economy, entrepreneurs must provide a product consumers want to buy and must provide it at a price they are willing and able to pay.

Suppose Michael is starting his own lawn mower service. Michael must first find customers that need their lawn cut. Afterwards, he must charge a fair price. If the price is too high, people will go elsewhere. If the price is too low, he won’t be able to cover his costs and will lose money.

Types of Economies

Command Economy: an economy in which the government, or a central authority plans out the economy ahead of time.

Here, prices are set by the government as are the number of participants.

Let’s go back to Michael and his lawn mower service. In a command economy, he’d first have to receive permission to start the service. In addition, his price would already be set. Michael wouldn’t have to worry about going out of business because of competition.

Types of Economies

Mixed Economy: an economy that combines elements of a market and command economy to operate.

Suppose Michael’s lawn mower service isn’t doing too well. But, if the government wants to make sure Michael keeps mowing, because it is a vital service, they may subsidize his business, or give him money, to help keep his business going.

Natural Resources

Natural Resources: elements from the Earth that are not made by people but can be used by them.

Natural Resources

Oil Coal Sun Plants Animals Oxygen Diamonds Pearls Natural Gas

Soil Water People Gold Silver Shells Salt Rubber Copper

Value

Why are resources so important?People use resources to make their

lives better.A resource’s value changes based

upon time and place. Basically, a resource only has value if someone wants it.

Renewable Resources

Renewable Resources: resources that replace themselves naturally or if people can grow or raise continuous supplies of them.

People, plants, and animals are all renewable.

Nonrenewable Resources

Nonrenewable Resources: resources that can never be replaced.

Once they are used, they are gone.These include most minerals and

fossil fuels.

Supply and Demand

Resources are not distributed evenly throughout the world.

Some places have lots of resources, others very little.

Supply and DemandImport: to bring in goods from another

country.Export: to send out goods to another

country.The uneven distribution of wealth

leads to scarcity of resources, which can sometimes lead to conflict.