What do you know about economics?

Transcription

1 Economics is THE STUDY OF HOW HUMANS MAKE DECISIONS ABOUT RESOURCES THAT HAVE ALTERNATIVE USES. RESOURCES INCLUDE CAPITAL (WEALTH USED TO INVEST IN BUSINESS), LAND, RAW MATERIALS, AND LABOR.

2 What do you know about economics? How do economics work in your personal life? Provide one example to support your ideas. How do economics work in American national life? Provide one example to support your ideas. How does economics work internationally? Provide one example to support your ideas.

3 -Factual Question: What are the characteristics of all economic systems? -Conceptual Question: What is the greatest good for society? (Stroll/Think/ Pair/Share) Debatable Question: What economic system provides the greatest good for the greatest number?

4 Scarcity All economic systems must deal with scarcity Scarcity is when.. Human wants and needs are unlimited. Resources are limited So, people must make choices, as seen in the next four questions.

5 Scarcity All economic systems must deal with scarcity Scarcity is when.. Human wants and needs are unlimited. Resources are limited So, people must make choices, as seen in the next four questions.

6 Question #1: What will be produced?

7 Question #2: How will it be produced?

8 Question #3: For whom will it be produced?

9 WHO DECIDES HOW TO ANSWER QUESTIONS 1-3? WHO OR WHAT DO YOU THINK SHOULD? THE INVISIBLE HAND, ENTREPRENEURS, WORKERS, CONSUMERS, THE GOVERNMENT, SOCIETY, OTHERS?

10 How to make economic choices: Incentive: a benefit that encourage people to act in certain ways. ntives-negotiation-statebudgets-closingfunds001.shtml

11 How to make economic choices: Economize: The best combination of costs and benefits.

12 How to make economic Choices: Opportunity Cost: what it costs to pursue one thing over another

13 Before the Enlightenment People believed in mercantilism: there was a limited amount of wealth in the world nations should control trade with laws and colonies to make sure they most of the world s wealth

14 Supply and Demand Supply: Goods or services businesses or governments produce. Demand: What consumers or citizens desire.

15 Means of Production The means of production are the resources needed to produce goods and services.. raw materials, tools, labor, capital wealth, etc.

16 Introduction to Trade in Period 4: Slavery: Identify economic terms in the video as you watch. JVG

17 Adam Smith Capitalism has been around for some time, but it was scientifically explained by Adam Smith in The Wealth of Nations written in Smith talked about the invisible hand of the market that actually creates wealth.

18 As Adam Smith says, It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard of their own interest. We address ourselves not to their humanity, but to their self-love, and never talk to them of our own necessities, but of their advantage. ( Reilly 194) Pair and Share: How does this show the workings of the invisible hand? Think critically.

19 The Invisible Hand The (entrepreneur) neither intends to promote the public interest, nor knows how much he is promoting it He intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he is intending only his own gain, and he is in this led by an invisible hand to promote an end which was no part of his intention.by pursuing his own interest he frequently promotes that of the society (Reilly 200) Pair and Share: How does this show the workings of the invisible hand? Think critically.

20 The Invisible Hand: The Price System Izzit video (5:00).

21 The Invisible Hand The market will provide what society needs because of the self-interest (greed?) of entrepreneurs and consumers. Hand.jpg

22 Capitalism/The Free Market LAISSEZ FAIRE CAPITALISM of the late19th/early 20 th centuries: the means of production are privately owned by businesspeople (entrepreneurs). You need natural laws like supply and demand, freedom, and competition. These incentivize innovation: to try new ideas or develop new products or services. Supply and Demand is what gives products their value. You need very little involvement of the government. This is also called a free market.

23 Efficiency Capitalism should be efficient.how can the product or service be produced or offered most efficiently? This is to maximize profit.

24 How would you organize the boarding of an airplane? WAY-WE-BOARD-AIRPLANES-MAKES- ABSOLUTELY-NO-SENSE

25 Natural Laws Supply and Demand: The less of something and/or the more people want it, the more valuable it is. Freedom: People must be able to make choices. Competition: Businesses must be free to enter and leave the market for the market to work. And, of course, scarcity.

26 Sourcing: APPARTS Adam Smith: an excerpt from The Wealth of Nation 1776 Fenton: pages Identify: Author, Audience, Main Idea, and Significance

27 Go into your notes/text and identify one example of each of the following: -Scarcity -Economizing -Incentives -Opportunity Costs -Mercantilism -Means of Production -Natural Laws: -Competition -Supply and Demand -Freedom -Capitalism s the Invisible Hand.

28 Have students create business plans See project instructions.

29 Show: Pennies a Day HOW CAPITALISM MAY BE ENDING POVERTY IN OUR WORLD TODAY. AS YOU WATCH THE FILM, LIST EXAMPLES OF SCARCITY, SUPPLY AND DEMAND, COMPETITION, FREEDOM, AND PROFIT.

30 Transition. Capitalism: Focus on individual freedom and scientific efficiency Socialism and Communism: Focus on the masses and equality

31 Socialism Socialism favors public (government) ownership over private ownership of the means of production. Society, not individuals, should control the nation s wealth. Wealth should be more equally distributed. You can have elements of a socialist economic system and a democratic political system.

32 Communism/Marxism: At Least in Theory Karl Marx and Frederick Engels developed communism in 1848 as workers lives changed in the industrial revolution.

33 Socialist Theory Our labor is what makes us human. What we do makes us who we are. Our labor is what give products their value.

34 Capitalism, according to Marxists, would, by its nature, lead to a communist revolution. Laissez-faire or industrial capitalism, according to communism, exploits (takes advantage of) workers. The workers (proletariat) will become educated about this and start a revolution against the capitalists (bourgeoisie).

35 The Utopian Communist State In theory.. Ownership of the means of production would first be with the state and then with the workers in a democracy. Classes would disappear. People would be less materialistic. In reality All communist societies up to this point have been dictatorships.

36 Another transition.. MODIFIED CAPITALISM.LAISSEZ FAIRE WILL CHANGE.

37 Modified Capitalism The Federal Government (Fed) and local governments regulate aspects of the economy. The Fed can use taxes and spending to influence the economy (Fiscal Policy). The Fed can lower or raise interest rates to influence the economy (Monetary Policy).