SCARCITY, ECONOMIC
SYSTEMS, AND FREE
ENTERPRISE
Economics
Mr. Biddle
Economics
 Economics: the attempt to satisfy seemingly
unlimited wants and needs using limited resources
Scarcity
 Imbalance between unlimited wants and
limited resources available for satisfying
those wants.
– Not having enough resources to produce all the
things people would like to have.
Scarcity Chart
Economic Systems
 Economic Systems are
created to deal with
scarcity.
 Traditional- A type of
economic system where all
the economic activity
comes from rituals, habits,
or customs. EX- The
Inuit's
– Normally found in a
community that relies of
agriculture or
hunter/gathering, (based on
trade)
Economic Systems
 Command- A type of
economic system
where all the decisions
are made by a central
authority or
government
 EX- Cuba, North
Korea, and China
Economic Systems
 Market- An Economic
system where
individuals and firms
act in their own best
interests.
– People make all the
decisions with no
government interference
Economic Systems
 Mixed- An Economic
system where people
are free to make
decisions with some
government influence
 Ex- The United States
of America
Reading Groups
2nd Period
Group 1
Carlee Peters
Sidney Dietrich
Kaylin Wells
Shannon Carey
James Holder
Group 2
Jacob Nordheim
Clay Thompson
Morgan Sydnor
Dylan Roseberry
Chris Bruin
Group 4
Alex Blackaby
Bobbie Carroll
Steven Rice
Group 3
Brett Bowen
Wade Browning Kody Workman
Jacob Johnson
Alex Clymer
Group 5
Nancy Shoemaker Kelsey Brewer
Emilee Feltner
Jackson Jenkins
Rachael Piechnik
Ashley Williams
Taylor Gabbard
Zach Williams
Reading Groups
5th Period
Group 1
Taelor McMillin
Blake Pollard
Erin Fitzpatrick
Garret Marshall
Caleb Schaller
Group 2
Zach Risen
Ashley Deering
Brandon Gibbs
Hunter Schalk
Cheyenne Meadows
Group 3
Courtney Brierly
Melanie Hill
Sean Neuspickel
Hailey York
Kenneth Ross
Group 4
Holly Jenkins
Dakota Burton
Cory Dozier
William Neace
Trevor Hown
Group 5
Garret Partin
Edward Bartram
Melanie Teegarden
Dawn Shaefer
Emily Prince
Anthony Clower
Reading Groups
7th Period
Group 1
Gowan Brock
Kenton Wells
Jordan Bishop
Chandler Aulick
Hannah Sweetland
Group 2
Sienna Price
Jesse Witt
Scribe Zagazeta
Tanner Daugherty
Dakota Barnes
Group 3
Summer Childers
Angel Harrison
Hannah Lee
Ansley Baker
Group 4
Anthony Coffman
Kevin Trent
Darrell Pugh
Dakota Spencer
Kenton Shoemaker
Group 5
Doug Eglian
Sammy Ross
Alexis Caudill
Brent Goins
Reading Groups
 After you have read you
article and answered your
questions create a visual
representation of the
Economic system you are
reading about
 Include
–
–
–
–
Raw Materials
Production
Distribution
Consumption
Market System
 Economic system in which supply, demand,
and the price system help people make
decisions and allocate resources
– Same as a Free Enterprise Economy
– Normally based on a system of Capitalism,
where people own the factors of production
Free Enterprise
Economy
 In the US we live in a Free Enterprise
Economy
 In this Competition is allowed to flourish
with a minimum of government influence.
5 Characteristics of a
Free Enterprise Economy
1. Economic Freedom
2. Voluntary Exchange
3. Private Property Rights
4. The Profit Motive
5. Competition
Economic Freedom
 Individuals are free to choose all economic
decisions, such as, where and when they
want to work:
–
–
–
–
–
–
Days/nights
Indoors/outdoors
In an office/at home
Have your own business/work for someone else
Leave job/Take a new job
What do I want to purchase?
Economic Freedom
 Businesses also are free to make decisions:
– Fire/hire who they want
– Produce what goods they want
– Decide how much to produce
– Sell where they want to sell
– Risk success/failure
– Charge what they want
 With Economic Freedom everything is open season!
Voluntary Exchange
 The act of buyers and
sellers freely and
willingly engaging in
market transactions
Voluntary Exchange
 Transactions are made
in such a way that
both the buyer and
seller are better off
after the exchange
– The buyer felt it was
worth more than the $
– Seller felt the $ was
worth more than the
product
Private Property Rights
 The Privilege that
entitles people to own
and control their
possessions as they
wish.
Private Property Rights
 Private Property
includes tangible items
such as houses and
cars, and intangible
items such as skills and
talents
 People have the rights
to use or abuse their
property as long as they
don’t interfere with the
rights of others
Private Property Rights
 Private Property gives
individuals the incentive
to work, save, and
invest, because if you
are successful you know
you can keep any
reward you earn
 People will own things,
because they can do
with it what they want
Profit Motive
 The driving force that
encourages people and
organizations to
improve their material
well-being.
Profit Motive
 Profit- the extent to
which persons or
organizations are better
off at the end of a
period than they were
at the beginning
 Entrepreneurs- those
who risk entering a
business in hopes of
making a profit
– F.E.E. allows people to
risk their $ in a business
venture
Competition
 The struggle among
sellers to attract
consumers while
lowering costs and
creating new products
 Because capitalism is
based on freedom and
voluntary exchange,
buyers compete to find
the best products at the
lowest price
The Role of the
Entrepreneur
 The Entrepreneur is one of the most
important people in the economy
 The Entrepreneur:
– Organizes and manages land, capital, and labor
– Starts up new businesses
– Creates new products
 All of this in order to seek the reward called
Profit!
The Role of the
Entrepreneur
 Many Entrepreneurs
fail
 Others stay in business
with varying degrees
of success
 Only a few manage to
be extremely wealthy
– Bill Gates
– Paul Allen
– Nolan Bushnell
The Role of the
Entrepreneur
 Entrepreneurs are the catalyst of a F.E.E.
– Starts the action
 When the Entrepreneur is successful everyone
benefits.
–
–
–
–
The Entrepreneur gets profit and a growing business
The workers are rewarded with a better job (more $)
Consumers are rewarded with new and better products
The Government is rewarded with a higher level of
economic activity and larger Tax receipts, used to build
roads, schools, libraries, etc.
– Everyone Benefits!
The Role of the
Entrepreneur
 When an entrepreneur is successful other
industry people rush in to “grab a share” of
the profit.
 To stay competitive the original
entrepreneur has to cut prices or improve
the quality of his original product (benefits
the consumer)
The Role of the
Entrepreneur
 In the end , the
entrepreneurs search
for profit leads to a
chain of events that
involves new
products, greater
competition, more
production, higher
quality, and lower
prices for consumers
The Role of the
Consumer
 Consumers have the
power in the economy,
because they
determine which
products will be
produced, by what
they purchase.
 If consumers like a
product they buy it, if
they don’t they wont!
 Some products make it
and some don’t!
The Role of the
Consumer
 Consumer Sovereignty-
The consumer is
sovereign (has the
power)
 “The costumer is always
right!”
The Role of the
Government
 Government has a role,
because citizens want
them to have a role.
– Justified, b/c the benefits
outweigh the costs
 The Government is the:
– Protector
– Provider of goods and
services
– Consumer
– Regulator
– Promoter of National Goals
Protector
 Enforces Laws
– Misleading Ads,
unsafe food and drugs,
environmental hazards
 It also protects
individual freedoms
– Can’t be fired for race,
or gender
 In short, the gov’t
ensures an efficient
and fair economy
Provider and Consumer
 The Government
provides goods and
services
– Such as, Education,
welfare, bus services,
parks, and libraries, etc
 The Government
consumes the same as
any other business,
putting money back
into the economy
Regulator
 The government is in
charge of preserving
competition in the market
place
 Regulates different things
such as, insurance rates,
building zones, Labor
laws, and health
regulations
 Government sets rules for
individuals protection
Promoter of
National Goals
 The government strives
to achieve economic
goals of freedom,
efficiency, equity,
security, full
employment, price
stability, and economic
growth
– Social Security
– Child Labor Laws
– Set Minimum Wage
Mixed Market
Economy
 Modified Private
Enterprise Economy
 People carry on with
their economic affairs
freely, but are subject
to some government
intervention and
regulation