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-Wants are the things you wish you could have. Each person has wants.
-A resource is anything that people can use to make or obtain what they need or want.
-What are some examples of resource???
-The problem of unlimited wants and limited resource affects individuals, companies, and
nations.
Why???
Resources limit the number of wants people can satisfy.
What is Business?
-Business is any activity that seeks profit by providing goods or services to others.
-Profit is the amount of money left over after a business has paid for the cost of
producing its goods and services.
-Profit is the motivation for taking the risk to start a business.
You as a Consumer
Factors of Production
-To meet the wants and needs of its people, a society must produce goods and services.
-The means to produce them are called economics resources, or factors of production.
Natural Resources
-Some resource, like wheat and cattle are renewable. They can be reproduced.
-Other resources are limited, or nonrenewable, like coal, iron, and oil.
Human Resources
-The knowledge, efforts, and skills people bring their work are called human resources,
or labor.
Capital Resources
-Capital resources are the things used to produce goods and services, like buildings,
materials, and equipment.
-As the wants and needs of people change, so do the needs for capital resources.
Entrepreneurial Resources
-Meeting the changing wants and needs of people requires Entrepreneurial Resources
-Entrepreneurs improve on ways to use resources, or create and produce new ones.
-A key to dealing with scarcity is to develop new resources and technologies.
-Economics is the study of how a society chooses to use resources to produce and
distribute goods and services for people’s consumption.
-The two basic and opposing economic systems that have been developed are:
*Market economy
*Command economy
Market Economy
-In a market economy economic decisions are made in the marketplace according to the
laws of supply and demand.
-Price is the amount of money given or asked for when goods and services are bought or
sold.
-Demand is the amount or quantity of goods and services that consumers are willing to
buy at various prices. .
-Supply is the amount of goods and services that producers will provide at various prices
-In a command economy a central authority makes the key economic decisions.
-A command economy is also called a planned or managed economy.
Communism Socialism
-Strong command economy -Moderate command economy
-The state makes all the economic decisions. -There is some form of private enterprise.
EX: China & Cuba EX: France & Sweden
Advantage
-the primary advantage of a command economy is that it guarantees everyone equal
standards of living.
-The standards of livings the amount of goods and services the average citizen can buy
Disadvantage
-Little choices of what to buy.
-No incentive for entrepreneurship when you can’t run your own business.
Mixed Economy
- Gross Domestic Product (GDP): The total value of the goods and services produce in
a country in a given year.
-Economists in clued four main areas in calculating GDPL:
* Consumer goods and services
* Business goods and services
* Government goods and services
* Goods and services sold to other countries.
-The GDP doesn’t include the goods and services that aren’t reported to the government.
Prosperity
- Prosperity is a peek of economic activity.
-Unemployment is low; production of goods and services is high, and new business open.
Recession
-During a recession, economic activity slows down.
-There is a general drop in the total production of goods and services, so the GDP
declines.
-the ripple effect is when a recession in one industry leads to a recession in other
industries.
Depression
-a deep recession that affects the entire economy and lasts for several years is called a
depression
-A depression can be limited to one country but usually spreads to related countries
-During a depression there is high unemployment, low production of goods and
manufacturing plants.
Recovery
- A rise in business activity after a recession or depression is called a recovery.
-During a recovery:
* The new demand for goods and services stimulates more production.
* The GDP grows
* New business open
* Production starts to increase
* People start going back to work and have money to spend again.
Unemployment rate
-There are different reasons for being unemployment, including:
* Temporary
* Seasonal
* Changes in industry
* Economic slowdown
Rate of Inflation
-Inflation is general increase in the cost of goods and services
-Inflation can happen when an economy actually becomes too productive
-As the demand for goods goes up, producers raise their prices.
-To pay the higher prices, workers demands higher wages
-When wages goes up, producers raise prices again to pay for the higher wages, and so on
-This situation can spiral out of control and lead to hyperinflation
National Dept
-When the government spends more on programs than it collects in taxes, the difference
in the amount is called the budget deficit.
-If a nation spends less than its income, it has a budget surplus
-The government will probably use a surplus to:
* cut taxes
* reduce the national dept
* increase spending for certain programs