LHS
Seminar in Business
Chapter 2 – Economic Resources and Systems
Transparency
Chapter 2 Economic Resources and Systems
Goals
Following Chapter 2, students should be able to:
--Define scarcity
--Identify the four factors of production
--Explain opportunity cost
--Differentiate the following economic systems
--market
--command
--mixed
--Explain the laws of supply and demand
Scarcity
--shortage of resources
Factors of production
--economic resources
--used to produce goods and services
1) Natural resources
--raw materials in nature
--examples?
--used to produce goods
--ex. a tree becomes a factor of production when used to make paper
What countries are known for their natural resources?
--U.S. – corn, soy beans, wheat
--Columbia – coffee beans
--Saudi Arabia – oil
Renewable resources
--can be reproduced
--examples?
Non-renewable resources
--limited supply
--examples?
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LHS
Seminar in Business
Chapter 2 – Economic Resources and Systems
Transparency
2) Human resources (2nd factor of production)
--labor
--knowledge, effort, and skill
3) Capital resources
--items used to produce goods and services
--equipment, materials, buildings, etc.
--examples?
--money is not a capital resource
--money is capital
--money is a resource
--money is used to purchase goods and services
4) Entrepreneurial resources
--entrepreneurs meet the changing wants and needs of people
--examples?
--Henry Ford – assembly line (mass production)
--Dell – custom computers
--Steve Jobs at Apple – I-pod
Chapter 2 Worksheet, p. 9
Three key economic questions:
1) What should be produced?
--and how much?
--a single resource can only be used for one purpose
--for example, land can be used:
--grow corn
--factory
--park
Opportunity cost
--decide to use for one purpose, give up the opportunity to use for another purpose
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LHS
Seminar in Business
Chapter 2 – Economic Resources and Systems
Transparency
2) How to produce it (2nd key economic question)
--if human resources (labor) > capital resources (equipment) = more manual
labor
--if capital resources > human resources = less manual labor
3) Who should share in what is produced?
--how do we distribute goods and services in the U.S.?
--people buy what they can afford
--safety net provided by charities, government
Three Types of Economic Systems
--determines how resources will be used
1) Market economy
--capitalism
--resources are privately owned
--own your own house
--run your own business
--based on supply and demand
--creates both great wealth and poverty
--countries?
--U.S., England, Japan
Demand
--amount of goods and services that consumers are willing to buy
--price goes down, consumers buy more
--price goes up, consumers buy less
Supply
--amount of goods and services that producers are willing to make
--price goes down, producers make less
--price goes up, producers make more
Equilibrium price
--quantity demanded and supplied are equal
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LHS
Seminar in Business
Chapter 2 – Economic Resources and Systems
Transparency
2) Command economy
--central authority makes economic decisions
--usually the government
--everyone economically equal
--countries?
--Cuba, formerly Russia
3) Mixed economy
--combination of market and command
--government - needs
--defense, education
--marketplace – wants
--cars, computers, I-pods
--most countries, including U.S.
Pgs. 28-29
--Thinking Globally
--4 Close
--Did You Know?
Chapter 2 Worksheet, pgs. 7-8
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