Agenda
Discussion or quiz on articles
 Review Factors of Production
 Production Possibilities Worksheet
 Economic Systems, Questions and Goals
 Adam Smith and Karl Marx
 Circular Diagram of an Economy
Homework




Read N.E. Chapter 6
Review Powerpoint for next class (online)
Read “Current Reading Assignment”
(online)
Questions
1.
2.
3.
What factor of production is key to Taiwan’s
success?
Which factor of production was important....
a. When Columbus sailed to the new world?
b. During the period of colonization?
c. During the industrial revolution?
How does this effect you in 2014?
Student Video…Four Factors
of Production

http://www.youtube.com/watch?v=0TD
n8pbT4ME&feature=youtu.be
a couple questions….
1. A production possibilities frontier shows
(a) farm goods and factory goods produced by an economy.
(b) the maximum possible output of an economy.
(c) the minimum possible output of an economy.
(d) underutilization of resources.
2. An economy that is using its resources to produce the maximum
number of goods and services is described as
(a) efficient.
(b) underutilized.
(c) growing.
(d) trading off.

Worksheet
Production Possibilities Worksheet
Production Possibilities Handout
THREE MINUTE BREAK
http://www.online-stopwatch.com/bombcountdown/
Economic Systems, Questions and Goals
Societies organize themselves within different systems
to allocate resources to produce goods and services to
achieve economic goals

Economic Systems, Questions & Goals
3 Economic
Questions
What gets
Produced?
Three Economics Systems
Free
Mixed
Centrally Planned
Market
Economy
Economy
Consumers
role
Government
How it gets
Produced?
Producers
Who
Consumes?
Income
for
individuals
and
government
Government
Government
The Five Economic Goals
1.
Growth

2.
Freedom

3.
Maximum Output
Security

5.
Individuals free to choose
Efficiency

4.
More stuff
Everyone has a minimum
Equity


Equal distribution of output (goods and services)
Sharing is caring

What is the most common economic
system in the world?
What is the most common economic
system in the world?
ANSWER: Mixed Economies
WHY?
Let’s talk about the five economic
goals
The Five Economic Goals
1.
Growth

2.
Freedom

3.
Maximum Output
Security

5.
Individuals free to choose
Efficiency

4.
More stuff
Everyone has a minimum
Equity


Equal distribution of output (goods and services)
Sharing is caring
Take a few minutes, which goal is most important to
you?
SURVEY OF THE CLASS
Which Goal is best achieved by which
Economic System?





Growth
Efficiency
Freedom
Security
Equity
Free Market
Centrally Planned
What is the most common economic
system in the world?
ANSWER: Mixed Economies
WHY? Because societies / nations want
some of each of the goals

Economic Systems, Questions & Goals
Three
Economic
Questions
1. What gets
Produced?
Three Economic Systems
Free
Mixed
Market
Economy
Consumers
role
2. How it gets
Produced?
Producers
3. Who
Consumes?
Income
for
individuals
and
government
Centrally Planned
Economy
Government
Government
Government

Adam Smith

1700s

What was going on in the late 1700s?

Philosopher

Individual (i.e. entrepreneur) creates value

Focus on…



Growth
Freedom
Efficiency
Every individual necessarily labors to render
the annual revenue of society as great as he
can. He generally neither intends to promote
the public interest, nor knows how much he
is promoting it. He intends only his own gain,
and he is, in this, as in many other cases, led
by an invisible hand to promote an end which
was not part of his intention.
Adam Smith

Karl Marx

Late 1800s,early 1900s



What was going on in late 1800s / early 1900s?
Labor, not entrepreneur, creates value
Focus on…


Equity
Security
“Labour is the source of all wealth.”
Karl Marx
Circular Diagram of an Economy
What type of
Economics
System?
Why?
What type of
Economics
System?
Why?
Let’s go back to Economic Goals….
Examples of why I think people are hardwired
for equity



Test results
Kindergarten playground
$5
Winston Churchill’s Description
The inherent vice of capitalism is the
unequal sharing of blessings; the
inherent virtue of socialism is the equal
sharing of miseries.
He advocated free market stuff
Homework



Read N.E. Chapter 6 (Why Bill Gates is so
much richer than you are)
Review Powerpoint for next class (online)
Read “Current Reading Assignment”
(online). Cuba
(http://www.economist.com/node/2155041
8/print).
HANDOUTS