economics chamberlain

For Whom to Produce

A nation must decide which of its citizens should benefit from the production of goods and services. A country should must also consider whose needs and wants are the most critical. Additional questions include: -How will goods and services be distributed? -Should the goods and services be shared equally among the people? -Should people who contribute more to producing the goods and services be able to get larger share? -If you have the money, shouldn't you be able to buy anything you want with your money?

Economic System

A nation's plan for answering the key economic questions

capitalism

Another name for the economic system in the U.S means that economic resources are usually privately owned by individuals rather than government. Individual owners are free to decide what they will produce with the resources.

earn money

Businesses supply goods and services to the marketplace for one main reason

Types of economic systems

Custom Based Economy Directed (Planned Economy) Market Economy

How to Produce

Economic resources combine in different ways to produce the same goods and services Each nation decides which combination of resources will best suit its circumstances

Market Economy

Generally found in countries that have democratic forms of government. In this economy, the three questions are answered by individuals through buying and selling activities in the marketplace. No one tells the consumers what to buy and no one tells business what to make and sell. Consumers and business make decisions based on their own interests.

Custom Based Economy

Goods are produced the way they have always been produced. Children of each generation are taught to use the same method to make the same goods their parents and grandparents produced. Goods are typically produced by hand with simple tools using people or animals for energy. Ex: weaving cloth on hand loom, making straw baskets, or planting rice by hand Change and growth occur slowly in countries whose economies follow customs and in which the people are poor in material goods.

Production of Goods

In some economic systems, you can buy whatever you want and can afford. In others your ability to buy may be limited by the country's answer to the previous question "What to produce?" Some countries may limit its production of consumer goods (such as high end clothes or CD players) therefore they become scarce. In the U.S., with our plentiful supply of goods and services, what you buy is largely determined by the amount of money you have and how you use them.

e-commerce

Marketplace of the future; Buying and selling of goods and services via the Internet;has changed the way people buy and sell everything; As countries expand economic development, technology will help create more efficient production, faster distribution, and more effective information flow.

What to Produce

Nations differ in their wants just as individuals do Meeting some or all of its people's wants is a challenge A country must learn to best use its resources Decisions must be made on which kinds of goods and services are valued most and best serve the nation

Features of the U.S. Market Economy

Private Enterprise Private Property Profit Competition Freedom of Choice

Direct Economy

Resources are owned and controlled by the government. The officials of the government, usually through centralized agencies and bureaucrats, decide what and how goods will be produced and how they will be shared. They decide how much of the nation's resources will be spent on military uses and how much will be used to produce consumer and capital goods. Directed economies plan all phases of the economy and command that all plans be carried out, using the military or police force if necessary. The average citizen has little to say about how the three economic questions are answered, and the freedom of the people is always limited in this type of system.

competition

Rivalry among businesses to sell their goods and services to buyers. This feature of a market economy gives you as a consumer the opportunity to make choices among countless goods and services that are available. encourages business owners to improve products, offer better services, keep prices reasonable and produce new things.

Mixed Economy

Some countries combine government ownership and control of basic industries with some private ownership of consumer-goods businesses. Some countries allow a limited amount of private enterprise. In the U.S. there is some government regulation of business. Government-operated enterprises: Post office, schools, city water agencies. Our economic system is not pure capitalism, so it is often referred to as modified or mixed capitalism.

profit motive

The desire to work hard and be creative to earn a higher profit

Emerging Market Economies

The economic success of market economies has caused many countries to reexamine their economic systems. Many directed or controlled economies have not prospered in comparison to market economies. Directed economies are not designed to meet the needs and wants of individuals. In most controlled economies, workers with different skills and responsibilities receive similar wages; therefore there is little incentive for people to work hard. The weaknesses of controlled economies have caused many nations through the world to change to market or mixed economies. The most notable is the collapse of communism in the Soviet Union. In the case of the Soviet Union (today's Russia), an entire generation was forced to do without many consumer goods such as cars, home appliances, and adequate housing. Emphasis was placed on industrial development. Today Russia is moving toward a market economy. Other countries once within the Soviet bloc, such as Poland, Hungary, and the Czech Republic, have made great strides toward establishing new economies. All of these economies now experience voluntary exchange and benefit from it.

freedom of choice

The private enterprise system gives you the right to enter a business or career of your choice, to own property, to make a profit, and to compete. This system provides greater freedom of choice than any other economic system: -As a worker, you have the right to organize with other workers, -Travel, -Express opinions in public forums (as long as you refrain from slander)

private enterprise

The right of the individual to choose whether to own a business, what business to enter, and what to produce with only limited government direction This right ensure your freedom to decide how you will earn a living.

voluntary exchange

The terms capitalism and free or enterprise system mean the same thing—they refer to a system in which most economic resources are privately owned and decisions about production and distribution are largely made by _________________ in the marketplace.

free or private enterprise system

This freedom of the individual to choose what to produce provides the rationale for another name

Economies

Traditional economies such as tribes in rural South America Command economies such as Cuba or North Korea Market economies such as the United States or New Zealand

Key Economic Questions

What goods and services are to be produced? How should the goods and services be produced? For whom should the goods and services be produced?

private property

You can own, use or dispose of things of value. In our country, you can own any item and do what you want with it as long as you do not violate the law in doing so. You also have the right to own, use and sell whatever you invent or create. Businesses also have the right to own property, including land, buildings, tools and the goods the business produces. Businesses also have the right to use and dispose of their property in any lawful way.

marketplace

any place where buyers and sellers exchange goods, services, and some form of money.

business

is an establishment or enterprise that supplies goods and services in exchange for payment in some form.

profit

is the money left from sales after subtracting all the costs of operating the business. Business owners are entitled to make these because they run the risk of losing money they invested to start the business.

business industry

provides the bulk of our employment as well as the products and services we enjoy.