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LEQ’sWhat are limited resources?
What are the 3 economic questions that every
society must answer?What are the similarities and differences between the various types of economic systems?
Make a list of the ten things you most want (things that you can buy). Money is no object!
Which of these are REALLY necessary for you to survive?
(necessary for life!)
Therefore, are these things WANTS or NEEDS?
Now, make a list of the top ten things you think you will need in
order to live a good life.
Comparing your two lists, first choice to first choice, second choice to second choice, which will you choose in order
to have a good life?
What did you give up and for what did you give it up?
What is this called?
Opportunity cost
Opportunity Costs
Something that is given up in order to have something else
Opportunity Costs
Even countries have to look at opportunity costs.
What are some things that our country has given up in order to gain other things?
Every country relies on its resources.
An abundance of resources NORMALLY = a wealthy country
(ex. of exceptions … corrupt government)
A lack of resources = poor country
So, what are resources?
Resources
Role of Resources
Should Kansas invest money in the lobster industry?
Should Florida invest money in the snow skiing industry?
Should Alaska invest money in the citrus fruit industry?
Why?
Would the Alaskan crab industry be a good industry for Alaska?
Would promoting beaches be a good industry for Florida?
Why?
Role of Resources
Normally, the availability of natural resources will dictate the answers to the question
… what will that region
produced?
Role of Resources
Alaska has the largest Alaskan crab industry in the United States.
Florida has the largest tourism industry in the United States.
Georgia has the largest peach industry in the United States.
Therefore, these states have developed specific industries based on the availability of natural resources. What is this called?
Specialization
How does SPECIALIZATION help a country?
What does Alaska specialize in? How does this help Alaska?
What does Kansas specialize in? How does this help Kansas?
What does Georgia specialize in? How does this help Georgia?
What does Saudi Arabia specialize in? How does this help Saudi Arabia?
What does the US specialize in? How does this help the US?
The 3 groups of resourcesLand Capital
Labor
Resources divided into 3 groups
Resources
landLabor
capital
Land is not just the soil, but also…
Plants
Animals
Water
Metals
Resources
Land• Plants• Water
• Animals• Metals
• oil
Laborcapital
Labor is the work people do. It includes…
Providing goods like……and providing services like…
A butcher, a baker, and a candlestick
maker.
Entertaining, firefighting,
and protection.
Capital …
buildingsmachines
tools…goods used to make other goods
But does capital refer to just goods?What other type of capital do we have?
Capital also refers to HUMAN capital.
How can a country invest in human capital?
Investing in education
Investing in health care
Investing in training people in
specific skills
How might a country benefit from investing in human capital?
What type of resources do you see in the following photo?
Resources
Land• Plants• Water
• Animals• Metals
• Oil
Labor• The work
people do• Goods
• Services
Capital• Goods to
make other
goods • Building
s• Machine
s• tools
• Human capital
• Education
• Training • Health
care
Make sure your graphic
organizer includes this information
These 3 groups of resources are also called…
Land Capital
…the factors of production.
Labor
Which of these are limited?
Land Capital
All of them!
Labor
Now the we understand
resources, let’s now look at economic systems!
3 basic questions of economics that every country has to answer …
What will be produced?How will it be produced?For whom will it be produced?
The rules a country follows in answering the 3 basic questions
are called…
4 kinds of economic systems
Traditional economyCommand economyMarket economyMixed economy
What do you think are the following types of economic
systems?
Folks answer the 3 basic questions by
producing what their families have always
produced.
The government answers the 3 basic questions and tells
people what they will produce.
Folks answer the 3 basic questions by
producing what they want to produce and selling their goods in
the market.
Some folks produce what they want; the government controls
the other.
Traditional Command
Market Mixed
Billy Bob grows corn because his father grew corn, and his grandfather grew
corn.
Scenarios …
Traditional Zululand’s government
determined that one village would grow corn
and the other peas.
Sally Sue sells sea shells and Peter Piper picks prickly peppers
and pears.
Blueland’s government owns the
oil production, but Bobby Jo sells the
drills.
Command
MarketMixed
Based on what has been done in the past.
The question of “how should goods and services be produced?” is answered by “what have we always done?” People herd cattle because
their families have always herded cattle
People farm because their families have always farmed
Government leaders decide the answers to the basic economic questions.
The government controls the land, labor, and capital.
The government decides what will be produced, how it will be produced,
and for whom it will be produced. And often times …
Where people will work How much will they be paid
Each person answers the 3 economic questionsPeople buy and sell whatever they like
People decide for themselves where they will work
The most important part of a market economy is the market
Mixed Government has some say over 3 basic questions
However, many decisions are made by the people
4 things that make a market system work…
CompetitionProfitPrivate propertyFreedom of exchange
How do these elements affect the market system?
How would the market system be different if one of these elements were missing?
Let’s see how each of these
elements impact the market system!
I need volunteers!
Note … Most systems not just one or the other … most lie somewhere in between.
Pure Command Mixed Pure Market
Now that we understand economic
systems, let’s look at what can hurt an economy!
Make a list of everything that you know of that can hurt a country’s economy.
Elements that can negatively affect a country’s economy …
Natural disasters Volcanoes / earthquakes Weather
Flooding Snow storms Hurricane
Conflict Strikes Boycotts UnemploymentTrade barriers
Your thoughts … what do you think
can negatively affect a country’s
economy?Working with your
partner, how many elements
can you and your partner list?
Trade Barriers … Which definition goes with which term?
TariffsQuotasEmbargos
A tax imposed by a government on imports
The limit on a number of items that can be imported into a
country.
A restriction on foreign trade, usually meant to hurt the other
country
How do each of these barriers
impact the price of a product?
Free Trade Agreement
What does free trade mean?
Who does the US have a free trade agreement with?
The absence of trade barriers.
• Today, the United States has FTAs with 17 countries, such as Israel, Jordan, Canada, Oman, and
Singapore to name a few.• In 2006, six new FTAs were implemented: with Bahrain,
El Salvador, Guatemala, Honduras, Morocco, and Nicaragua.
What can we determine about our
trading industry
based on this chart?
Words to know…Economic systemTraditional economyMarket economyMixed economyCommand economyFactors of
production3 basic questions of
economicsOpportunity costTariffs
QuotasEmbargoesFree trade
Ticket out the door…
What are limited resources?What are the 3 economic questions that every society must answer?
What are the similarities and differences between the various types of economic systems?
Answer the following essential questions …
Share your notes with a partner to ensure your notes
are complete!
A good is something that is made by people.
A service is action people do for others.
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