WHAT IS ECONOMICS?
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College Education
WHAT IS ECONOMICS?
• Economics is all about making choices with your
limited resources!
• “Scarcity” is the concept of not being able to have
everything you want because you lack the
resources (Money, Time, Products, etc).
TYPES OF ECONOMIES
• Traditional Economy: relies on agriculture (farming),
fishing, and hunting.
• Do not exist on the national level today.
• Pure Market Economy: involves buyers and sellers
interacting to determine what is produced and to
negotiate prices; there is no government
intervention.
• Do not exist on the national level today.
• Form(s) of Government: Direct Democracy
TYPES OF ECONOMIES
• Command Economy: supply (what is produced) and
price are determined strictly by the government.
• Saudi Arabia, China, Vietnam, North Korea
• Form(s) of Government: Autocracy, Unitary, Parliamentary,
Oligarchy, monarchy
• Mixed Economy: combination of the government and
market forces determine supply and price.
• United States, United Kingdom, Canada, Germany, Australia,
Japan
• Form(s) of Government: Presidential, Parliamentary, Unitary,
Federal
3 ECONOMIC QUESTIONS
• Question #1: What to produce?
• Which goods and/or services are we going to make
and offer for sale in our country?
• How does the Middle East answer this question?
• Producing oil.
3 ECONOMIC QUESTIONS
• Question #2: How to produce?
• How are we going to make the things we want to
sell?
• How does the Middle East answer this question?
• Use of capital (oil rigs) and human capital (people)
to work the oil rigs.
3 ECONOMIC QUESTIONS
• Question #3: For whom to produce?
• Who are we going to make things for? Who is going
to buy our stuff??
• How does the Middle East answer this question?
• Sell to those who use oil.
SAUDI ARABIA
• Form of Government: Monarchy
• Type of Economy: Command Economy
• How does this relationship work?
• The King has complete control, including control
over the economy. The government answers the 3
Economic Questions.
ISRAEL
• Form of Government: Parliamentary
• Type of Economy: Market
• How does this relationship work?
• There is very little government involvement in the
economy. Market forces are left to answer the 3
Economic Questions.
TURKEY
• Form of Government: Republic
• Type of Economy: Mixed
• How does this relationship work?
• The government sets certain rules and regulations
that the market must follow. The government and
the market work together to answer the 3 Economic
Questions.