SCARCITY, ECONOMIC SYSTEMS, AND FREE

ENTERPRISEEconomics

Mr. Biddle

Economics

Economics: the attempt to satisfy seemingly unlimited wants and needs using limited resources

Scarcity Imbalance between unlimited wants and

limited resources available for satisfying those wants.– Not having enough resources to produce all the

things people would like to have.

Scarcity Chart

Economic Systems Economic Systems are

created to deal with scarcity. Traditional- A type of

economic system where all the economic activity comes from rituals, habits, or customs. EX- The Inuit's– Normally found in a

community that relies of agriculture or hunter/gathering, (based on trade)

Economic Systems

Command- A type of economic system where all the decisions are made by a central authority or government

EX- Cuba, North Korea, and China

Economic Systems

Market- An Economic system where individuals and firms act in their own best interests. – People make all the

decisions with no government interference

Economic Systems

Mixed- An Economic system where people are free to make decisions with some government influence

Ex- The United States of America

Reading Groups2nd Period

Group 5Kelsey BrewerJackson JenkinsRachael PiechnikAshley WilliamsTaylor GabbardZach Williams

Group 4Alex BlackabyBobbie CarrollSteven RiceBrett BowenKody Workman

Group 3Wade BrowningJacob JohnsonAlex ClymerNancy ShoemakerEmilee Feltner

Group 2Jacob NordheimClay ThompsonMorgan SydnorDylan RoseberryChris Bruin

Group 1Carlee PetersSidney DietrichKaylin WellsShannon CareyJames Holder

Reading Groups5th Period

Group 5Garret PartinEdward BartramMelanie TeegardenDawn ShaeferEmily PrinceAnthony Clower

Group 4Holly JenkinsDakota BurtonCory DozierWilliam NeaceTrevor Hown

Group 3Courtney BrierlyMelanie HillSean NeuspickelHailey YorkKenneth Ross

Group 2Zach RisenAshley DeeringBrandon GibbsHunter SchalkCheyenne Meadows

Group 1Taelor McMillinBlake PollardErin FitzpatrickGarret MarshallCaleb Schaller

Reading Groups7th Period

Group 1Gowan BrockKenton WellsJordan BishopChandler AulickHannah Sweetland

Group 2Sienna PriceJesse WittScribe ZagazetaTanner DaughertyDakota Barnes

Group 3Summer ChildersAngel HarrisonHannah LeeAnsley Baker

Group 4Anthony CoffmanKevin TrentDarrell PughDakota SpencerKenton Shoemaker

Group 5Doug EglianSammy RossAlexis CaudillBrent Goins

Reading Groups

After you have read you article and answered your questions create a visual representation of the Economic system you are reading about

Include – Raw Materials

– Production

– Distribution

– Consumption

Market System Economic system in which supply, demand,

and the price system help people make decisions and allocate resources– Same as a Free Enterprise Economy– Normally based on a system of Capitalism,

where people own the factors of production

Free Enterprise Economy

In the US we live in a Free Enterprise Economy

In this Competition is allowed to flourish with a minimum of government influence.

5 Characteristics of a Free Enterprise Economy

1. Economic Freedom

2. Voluntary Exchange

3. Private Property Rights

4. The Profit Motive

5. Competition

Economic Freedom

Individuals are free to choose all economic decisions, such as, where and when they want to work:– Days/nights– Indoors/outdoors– In an office/at home– Have your own business/work for someone else– Leave job/Take a new job– What do I want to purchase?

Economic Freedom Businesses also are free to make decisions:

– Fire/hire who they want

– Produce what goods they want

– Decide how much to produce

– Sell where they want to sell

– Risk success/failure

– Charge what they want

With Economic Freedom everything is open season!

Voluntary Exchange

The act of buyers and sellers freely and willingly engaging in market transactions

Voluntary Exchange

Transactions are made in such a way that both the buyer and seller are better off after the exchange– The buyer felt it was

worth more than the $

– Seller felt the $ was worth more than the product

Private Property Rights

The Privilege that entitles people to own and control their possessions as they wish.

Private Property Rights Private Property

includes tangible items such as houses and cars, and intangible items such as skills and talents

People have the rights to use or abuse their property as long as they don’t interfere with the rights of others

Private Property Rights

Private Property gives individuals the incentive to work, save, and invest, because if you are successful you know you can keep any reward you earn

People will own things, because they can do with it what they want

Profit Motive

The driving force that encourages people and organizations to improve their material well-being.

Profit Motive Profit- the extent to

which persons or organizations are better off at the end of a period than they were at the beginning

Entrepreneurs- those who risk entering a business in hopes of making a profit– F.E.E. allows people to

risk their $ in a business venture

Competition

The struggle among sellers to attract consumers while lowering costs and creating new products

Because capitalism is based on freedom and voluntary exchange, buyers compete to find the best products at the lowest price

The Role of the Entrepreneur

The Entrepreneur is one of the most important people in the economy

The Entrepreneur:– Organizes and manages land, capital, and labor– Starts up new businesses– Creates new products

All of this in order to seek the reward called Profit!

The Role of the Entrepreneur

Many Entrepreneurs fail

Others stay in business with varying degrees of success

Only a few manage to be extremely wealthy– Bill Gates– Paul Allen– Nolan Bushnell

The Role of the Entrepreneur

Entrepreneurs are the catalyst of a F.E.E.– Starts the action

When the Entrepreneur is successful everyone benefits.– The Entrepreneur gets profit and a growing business

– The workers are rewarded with a better job (more $)

– Consumers are rewarded with new and better products

– The Government is rewarded with a higher level of economic activity and larger Tax receipts, used to build roads, schools, libraries, etc.

– Everyone Benefits!

The Role of the Entrepreneur

When an entrepreneur is successful other industry people rush in to “grab a share” of the profit.

To stay competitive the original entrepreneur has to cut prices or improve the quality of his original product (benefits the consumer)

The Role of the Entrepreneur

In the end , the entrepreneurs search for profit leads to a chain of events that involves new products, greater competition, more production, higher quality, and lower prices for consumers

The Role of the Consumer

Consumers have the power in the economy, because they determine which products will be produced, by what they purchase.

If consumers like a product they buy it, if they don’t they wont!

Some products make it and some don’t!

The Role of the Consumer

Consumer Sovereignty- The consumer is sovereign (has the power)

“The costumer is always right!”

The Role of the Government

Government has a role, because citizens want them to have a role. – Justified, b/c the benefits

outweigh the costs

The Government is the:– Protector

– Provider of goods and services

– Consumer

– Regulator

– Promoter of National Goals

Protector

Enforces Laws– Misleading Ads, unsafe

food and drugs, environmental hazards

It also protects individual freedoms– Can’t be fired for race,

or gender In short, the gov’t

ensures an efficient and fair economy

Provider and Consumer

The Government provides goods and services– Such as, Education,

welfare, bus services, parks, and libraries, etc

The Government consumes the same as any other business, putting money back into the economy

Regulator

The government is in charge of preserving competition in the market place

Regulates different things such as, insurance rates, building zones, Labor laws, and health regulations

Government sets rules for individuals protection

Promoter of National Goals

The government strives to achieve economic goals of freedom, efficiency, equity, security, full employment, price stability, and economic growth– Social Security– Child Labor Laws– Set Minimum Wage

Mixed Market Economy

Modified Private Enterprise Economy

People carry on with their economic affairs freely, but are subject to some government intervention and regulation