Chapter Two: Economics Systems. Mr. Mattingly Economics
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1 Chapter Two: Economics Systems Mr. Mattingly Economics
2 What is an economic system? Economic System = process a society uses to produce goods or services Answer the three questions of production Four Types of Economics Systems: Traditional Command Market Mixed * All economic systems today are mixed.
3 Economic Systems: Traditional Economy = relies on customs and traditions Based in tribal societies / Carry on the role of your parents Focus on sharing Command Economy = government answers the economic questions AKA: Planned Economies Ex: Middle Ages with feudalism Market Economy = individuals answer the economic questions No Government Involvement / Personal Freedom Adam Smith: An Inquiry into the Nature and Causes of the Wealth of Nations Invisible Hand at work? Self-Interest = impulse that encourages people to fulfill needs and wants Incentive = anything that encourages you to behave a particular way
4 Video: Invisible Hand
5 Mixed Economies: Mixed Economy = combines elements of all economic systems Different degrees of government control How much intervention? Three Mixed Economies: Authoritarian Socialism Capitalism Democratic Socialism
6 Mixed Economy: Authoritarian Socialism Authoritarian Socialism = close to the pure command model Government answers almost all the questions Long-Range Planning Government owns almost all the resources AKA: Communism Goal: Forced Social Equality Examples of Authoritarian Socialism: U.S.S.R (Collapsed) Cold War, Cuba North Korea
7 Mixed Economy: Capitalism Capitalism = closest to the market model Individuals own the factors of production Provides Choice (Ex: Career) Government enacts some regulations Ex: Health and Safety Standards Capitalist Countries: United States Canada Japan
8 Mixed Economy: Democratic Socialism Democratic Socialism = between capitalism and authoritarian socialism Government owns some of the factors of production Limited to Key Industries Ex: Health Care, Telephone, Transportation Examples of Democratic Socialism: Sweden France Tanzania
9 Quiz Time: CH. 2 QZ. 1
10 St. Louis Parking Question?
11 PBS Frontline: Sick Around the World
12 The United States: Free Enterprise Another name used for capitalism. Enterprise = business Five Features of Free Enterprise: 1. Own private property and enter into contracts 2. Make individual choices 3. Engage in economic competition 4. Make decisions based on self-interest 5. Participate in the economy with limited government involvement
13 Free Enterprise Terms: Private Property = goods owned by individuals or businesses Contracts = agreements to buy and sell goods and services Always read Competition = economic rivalry among businesses Lowers Prices Improves Products Voluntary Exchange = unconditional and mutually accepted transaction
14 Free Enterprise Decision Making: Economic Actors: Producers Consumers Government Circular Flow Model = shows the exchanges between the actors Tip: Copy Model in Your Notes
15 U.S. Economic Goals: Economic Freedom (Choice) 2. Efficiency Best use of resources 3. Equity (Equal or Fair) Share in the costs and benefits 4. Security Protect from poverty 5. Stability Full Unemployment and Price Stability 6. Growth Standard of Living = people s economic well-being
16 Free Enterprise Propaganda: 1954 Cartoon
17 Movie Clip: Greed is good. Gordon Gekko played by Michael Douglas in Wall Street (1987)
18
19 Free Market: Individual Choice Free Enterprise: Consumer Choice and Freedom How do businesses attract consumers? Product Quality & Lower Prices Advertising Strategies (see handout): Emotional Appeal = stirs up emotions to cloud judgement Card-Stacking = cites only good points or bad points Bandwagon = claims everyone is doing it / missing out Testimonial = famous person s or expert s endorsement Name-Calling = makes negative statements about the competition Repetition = states the products name / slogan over and over Logical Argument = gives honest facts * How does sex appeal apply to the advertising?
20 Super Bowl Ad: Mean Joe Green (1980)
21 Super Bowl Ad: Apple s Macintosh (1985)
22 Super Bowl Ad: Budweiser Frogs (1995)
23 Super Bowl Ad: Top Ten List from 2012
24 imovie Partner Project: Super Bowl Ad 2012 Super Bowl Ad: $3.5 Million (Average Cost) Why do Super Bowl Ads cost this much? Advertising Simulation: Marketing Team Goal: Create a 30 second Super Bowl Ad Use the basic advertising strategies Marketing team must create 3 advertisement options Product: Diet Water Competition: All other drinks
25 PBS Frontline: Sick Around America
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