Chapter 2
Economic Resources & Systems
Mrs. Rachubinski
Entrepreneurship
Chapter 2 Objectives
Define
scarcity
List the four factors of production.
Identify the differences between
market and command economies
Explain why most countries prefer a
mixed economy.
What is Economics?
Chapter 2.1
Critical Thinking & Discussion
Did
a store ever run out of an item
you wanted to buy?
Did a store ever discontinue and item
you liked?
What
did you do?
Why was the store out of the item?
Scarcity
A
shortage of resources.
Example:
A community not having enough
oil, doctors, or technology to satisfy
wants and needs.
Factors of Production
Factors of Production
Everything
that is necessary to
produce a society’s goods and
services.
4 Factors of Production
1.
Natural Resources
2.
Labor Resources
3.
Capital Resources
4.
Entrepreneurial Resources
1. Natural Resources
Raw
materials found in nature.
Used
to produce goods.
Examples:
Trees -> Paper
Fish -> harvested for food
Natural Resources (continued)
Elements
that can be combined to
create goods.
Countries
resources.
depend on their natural
2 Types of Natural Resources
Renewable
Can
be reproduced
Ex: wheat, cattle
Nonrenewable
Limited
Ex:
coal, iron, oil
2. Labor Resources
Knowledge,
efforts, and skills people
bring to their work.
Examples:
teachers, coal miners,
managers, farmers
Labor Resources (continued)
Skilled
or unskilled
Physical
Labor
or intellectual
Unions
3. Capital Resources
Things
used to produce goods and
services.
Examples:
Buildings, materials,
equipment, delivery trucks,
supermarkets, cash registers, etc.
4. Entrepreneurial Resources
Meets
the changing wants and needs
of people.
Entrepreneurs
recognize the need
for new goods and services.
Improve
resources
Review Key Questions
Socrative
Room:
rachubinskiB124
Chapter 2.2
TYPES OF ECONOMIC SYSTEMS
Economics
How
society chooses to use
resources:
produce and distribute goods and
services.

Business Contribution
Inventing
resources
products that use available
Economic System
‘monitors’
resources
Goal:
provide people with a minimum
standard of living or quality of life
2
types of economic systems:
Market
Economy
Command Economy
Create a large ven diagram in
your notes – half of a page in
size. Label one side ‘Market
Economy’, one side ‘Command
Economy’, and Both in the
middle.
Market Economy
Economic
decisions are made in the
marketplace
Market Economic System
Capitalism
Resources
Own
are privately owned
your house, land, business, etc.
Government
control is minimal
In reference to the US, what does the
government control? Record in notes
Market Economy (continued)
The
Profit Motive
Desire
to make more money
Businesses constantly competing
Owners and producers reap most rewards
Fact:
CEOs make 500 times avg workers
Command Economy
Central
authority makes key
economic decisions.
Command Economy
Government
Airlines
owns major resources
and steel
Makes key economic decisions
Individuals may own some businesses
Command Economy
Advantages
Disadvantages
Brainstorm in your notes!
Mixed Economy
Combination
economies
The
of market and command
government takes care of
peoples needs, the marketplace takes
care of peoples wants.
Review Questions
How does a market system decide what will
be produced?
In
a market system, what determines how
many goods and services an individual can
buy?
Some
nations can product more goods with
fewer workers than other countries that
have more workers. How can this be true?
Background
World’s
most populous nation
Growing
economy
1.3
Billion
Industry
& Agriculture
Communist
Features of China
Rivers
Mountains
Country
14
Boarders
Countries (including Russia & India)
What
influence might these features
have on the Chinese economy?
"China
should overtake the US to
become the largest economy in the
world by 2020, then be overtaken by
India by 2050," Willem Buiter, chief
economist at Citigroup predicted
Measuring Economic Progress
domestic
saving/ investment
demographic prospects
health
education
quality of institutions and policies
A measure of trade openness
China
 40% of workforce is in
the service industry
US
 80% of workforce is in
the service industry
 49%
manufacturing
 19%
 Debt
= $400 billion
 Creditor
manufacturing
 Debt
= $13.75 trillion
nation
What are some ways to revitalize our economy?