 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?
Which of these are REALLY
necessary for you to survive?
(necessary for life!)
Therefore, are these things WANTS or
NEEDS?
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?
Opportunity cost
Something that is
given up in order to
have something else
Even countries have to look at
opportunity costs.
What are some things that our
country has given up in order to
gain other things?
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?
Normally, the availability of
natural resources will dictate the
answers to the question …
what will that region produced?
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?


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?
Resources divided into 3 groups
Labor
Land
Capital
The 3 groups of resources
Resources
capital
land
Labor
Land is not just the soil, but also…
Animals
Metals
Plants
Water
Land
•Plants
•Water
•Animals
•Metals
•oil
Resources
capital
Labor
Labor is the work people do. It includes…
Providing goods like…
…and providing services like…
Entertaining,
firefighting,
and
protection.
A butcher, a baker,
and a candlestick
maker.
machines
buildings
tools
…goods used to make other goods
But does capital refer to just goods?
What other type of capital do we have?
How can a country invest in human
capital?
Investing in
training people in
specific skills
Investing in
education
Investing in health
care
How might a country benefit from investing in
human capital?
Make sure your
graphic
organizer
includes this
information
Capital
Resources
Land
• Plants
• Water
• Animals
• Metals
• Oil
Labor
• The work people do
• Goods
• Services
•Goods to make
other goods
•Buildings
•Machines
•tools
•Human capital
•Education
•Training
•Health care
These 3 groups of resources are also called…
Labor
Land
Capital
…the factors of production.
Which of these are limited?
Labor
Land
Capital
All of them!
 What will be produced?
 How will it be produced?
 For whom will it be produced?
Traditional economy
Command economy
Market economy
Mixed economy
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.
Billy Bob grows corn
because his father
grew corn, and his
grandfather grew
corn.
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.
 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 questions
 People 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
 Competition
 Profit
 Private property
 Freedom of exchange
Let’s see how each of
these elements
impact the market
system!
I need volunteers!
How do these elements affect the market
system?
How would the market system be different if
one of these elements were missing?
Pure Command
Mixed
Pure Market
Make a list of everything that you know of that can
hurt a country’s economy.
Your thoughts …

 Volcanoes / earthquakes
 Weather
what do you think
can negatively
affect a country’s
economy?
Working with your
partner, how many
elements can you
and your partner
list?
Natural disasters
 Flooding
 Snow storms
 Hurricane





Conflict
Strikes
Boycotts
Unemployment
Trade barriers
 Tariffs
 Quotas
 Embargos
How do each of
these barriers
impact the price
of a product?
A tax imposed by a government
on imports
A restriction on foreign trade,
usually meant to hurt the other
country
The limit on a number of items
that can be imported into a
country.

What does free trade mean?
The absence of trade barriers.

Who does the US have a free trade agreement with?
•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?
Economic system
Traditional economy
Market economy
Mixed economy
Command economy
Factors of production
3 basic questions of
economics
 Opportunity cost
 Tariffs
 Quotas









Embargoes
Free trade
Answer the following essential questions …
 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?
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.