Traditional
Team 1
Team 2
Team 3
Team 4
Team 5
Team 6
Market
Command
Total
1.
2.
3.
4.
Which system had the most incentive to work?
Why?
Which system had the least incentive to work?
Why?
Which system was the most inefficient by
modern standards? Explain.
Which system would you like to live in, why?
Standards Mastery Sheet
SSEF1a
1
2
3
4
5
37
+
+
+
-
+
-
SSEF1b
9
10 11 12 13 15 16 39
SSEF1c
6
8
SSEF1d
17 18 19 20 26 40
SSEF2a
23 24 25 27 28 29 30 31 32 33 34 35 36
SSEF2b
7
8
21 22 23
14 23 38 40
Total
Correct
Total
Number
Mastery
Percentage
4
6
67
Economic System

Economic System – method used by society to
allocate/distribute the scarce resources, in order to provide
for the wants and needs of the people
Three Economic Questions
1.
2.
3.
What goods and services should be produced?
How should these goods and services be produced?
For Whom to produce them for?
Four Economic Systems
1.
2.
3.
4.
Traditional economy – relies on habit, custom, or ritual to decided the 3
economic questions
Market economy – economic decisions are made by buyers and sellers trading
freely.
Command Economies – in a centrally planned economy, the central
government decides how to answer the three economic questions.
Mixed Economies – most modern economies are mixed economies, marketbased economic systems in which government plays a role in the market.

Bead Game Simulation
Economic Freedom
Economic Freedom - freedom to make choices free of the government
• Individual – where to work, study, consume
• Business – what, where and how to produce
Economic Efficiency
Economic Efficiency - making the most of scarce resources, using your resources
wisely and productively
•Technological innovations allow society to be more productive
• Humans to robots
Economic Security
Economic Security - government will provide a safety net in times of economic
downturns
• Social Security, welfare, unemployment checks, etc.
Economic Predictability
Economic Predictability - knowing that goods and services will be consistently
available
• Gas, food, energy, etc.
Economic Equity
Economic Equity - Fairness, being paid according to your skill level, not being
discriminated against
• Lebron James is higher paid than a teacher
• A teacher is higher paid than a cashier at Wal-mart
Economic Growth
Economic Growth – improving the economy from year to year, improving standard
of living as measured by GDP.
• Individual – better jobs, nicer homes, newer cars….better stuff!
• Business – produce more, increase customers, open new factories, etc.
Economic Innovation
Economic innovation – improving upon existing technology in order to improve
efficiency.
• Walkman to the iPhone, Record Player to Digital Media
Additional Goals
Additional Goals – future goals for a society
• Environmental protection, full employment, universal medical care, etc.
Poster Requirements:
1. Title - Economic Goals and
Societal Values
2. Summary Statement – “The Economic Goals
and Societal Values provide a basic
framework for each society and their
attempts to provide for their people.”
3. Pictures of each goal represent each of the
economic and social goals.
• 1 if working alone
• 2 if working with a partner
• 3 if working with a group of 3
4. Label, describe and summarize each picture
1.
2.
3.
4.
5.
6.
7.
8.
Economic Freedom
Economic Efficiency
Economic Security
Economic Predictability
Economic Equity
Economic Growth
Economic Innovation
Additional Goals
Economic Efficiency
Picture Summary: This picture represents assembly
line production at an automobile manufacturing plant.
This shows how the division of labor and specialization
can increase efficiency.
Economic Goals and Societal Values
Summary Statement:
The Economic Goals and
Societal Values provide a basic
framework for each society and
their attempts to provide for
their people.
Economic Predictability
Economic Security
Economic Efficiency
Definition: picture represents an
efficient use of resources through
assembly line production
Economic Innovation
Economic Freedom
Economic Growth
Economic Equity
Additional Goals
Poster Requirements:
1. Title - Economic Goals and Societal Values
2. Summary Statement – Purpose of economic and Societal Values
3. At least 8 pictures to represent each of the Economic Goals and Social Values
4. Label, definition and picture description for each of the 8 Economic Goals and Societal Values
Statements
1.
2.
3.
4.
5.
6.
7.
8.
Last week I willingly enrolled in college courses
at Coastal. I am so happy that I make my
decisions about my future.
My uncle lost his job, but thankfully he is able to
receive unemployment checks.
Wal-Mart recently upgraded all of their registers
to touch screen monitors.
General Motors replaced all of their human
workers with robots in order to increase
productivity.
As a result of the internet and technology, our
economy has experienced significant expansion
over the past 30 years.
I can always expect Publix to have the food I
like!
Hopefully in the future we will have full
employment.
With every degree/skill I earn, I improve my
ability to make money.
Economic Goal
1. Economic Freedom
2. Economic Security
3. Economic Innovation
(Efficiency)
4. Economic Efficiency
(Innovation)
5. Economic Growth
(Innovation)
6. Economic Predictability
7. Additional (Future)
Goals (Equity)
8. Economic Equity
(Growth)

Imagine that you are walking into Walmart. List 3 items
that you could purchase and the departments that you
would find them in.
The Free Market


Market – buyers and sellers meet to exchange goods and services
Market Economy – economic decisions are made by consumers and
businesses based on buying and selling of goods and services
 All resources are privately owned
 Any income derived from selling resources goes exclusively to the owner
 The government has no role
Role of the Consumer



Consumer Sovereignty - in a free market, consumers determine the goods that
are produced; this makes them "sovereign" over production in an economy.
“Ruler” of the market; expressed through a dollar vote for products when we
make purchases. “The customer is always right”.
When consumers buy products, their “dollar vote” signals to producers what to
make and how much.
 Specialization – the separation of tasks within a system;
people focus on a specific purpose/task
 Division of Labor – Workers perform fewer tasks in
order to operate more efficiently
 Specialization – the separation of tasks within a system;
people focus on a specific purpose/task
 Division of Labor – Workers perform fewer tasks in
order to operate more efficiently
Specialization Examples

Glynn Academy – teachers in different departments
 Each teacher can master their content
 Present it in the most efficient manner possible
Social Studies
Math
Science
English
Specialization Examples
Rancher
Publix Worker
Slaughter House
Final Good
(Output)
Meat Cutter
Consumer Good
Specialization and Efficiency

Productivity – average amount of output (good or service) per unit of input
(labor, machine, etc.)
 Increased productivity means to do more with less
 Capital investments allow increased efficiency
Specialization and Efficiency

Productivity – average amount of output (good or service) per unit of input
(labor, machine, etc.)
 Increased productivity means to do more with less
 Capital investments allow increased efficiency
Productivity
Mary looks over reports on four of her workers. Jack made 25 baskets in 5 hours.
Walter made 36 baskets in 6 hours. Rudy made 40 baskets in 10 hours. Sam
made 22 baskets in 4 hours. Jim made 50 baskets in 10 hours. Who has the
greatest productivity?
Jack 25/5 = 5 Baskets per hour
Walter 36/6 = 6 Baskets per hour
Rudy 40/10 = 4 Baskets per hour
Sam 22/4 = 5.5 Baskets per hour
Jim 50/10 = 5 Baskets per hour
Walter has the greatest productivity
Productivity Creates Wealth
3rd World Countries
Developed Countries
29
Households and Firms


Household – Person or group of people living in a residence
 Consumers - use the finished goods and services (outputs) to
satisfy wants and needs
Firm – business, organization that uses factors of production
(inputs) to produce a product, which it then sells
 Suppliers – transform “inputs” (F.O.P.) into “outputs” (products)
Product Markets

Product Markets – Households and firms interact; producers
sell their goods and services to consumers
 Households are buyers of goods and services
 Firms are sellers of goods and services (outputs)
Factor Markets

Factor Markets – the markets where productive resources
(F.O.P)/Inputs are bought and sold
 Labor - Firms (businesses) hire workers and pay them salaries
 Land - Purchased/rented land
 Capital - Use money from households (savings, investment,
etc) to purchase capital goods
Circular Flow Model of Economic Activity – shows the flow of money and goods/services
from and to businesses and households
Consumer Spending
Product
Market
Business Income/Revenue
•Market for Goods
and Services
•Firms sell
Households Buy
Consumer Goods and Services
Final Goods and Services
Sold
Households
Firms
(Business)
• Buy and Consume
Goods and Services
•Own and sell
the F.O.P
• Produce and sell
Goods and Services
•Hire and use F.O.P.
Land, Labor, Capital - provided by
household
Inputs for Production (F.O.P.)
Factor
Market
Income to Households/Individuals
Market for F.O.P
•Households sell
•Firms buy
Payment for F.O.P. – Rent (Land) Wages
(Labor), Interest (Capital),
Profit (Entrepreneurs)
Application Questions
1.
2.
3.
4.
In the factor market, what do businesses provide households? Income/payment the F.O.P
The flow of goods and services in the product market is represented by which firm and
products on the model below? Starbucks/Coffee
When you apply for a job at the local Starbucks which market are you in? Factor
Which color arrows represent the flow of money; what color arrows represent the flow of
inputs and outputs.
Blue/Tan
Daily Assignment - Circular Flow Model of Economic Activity
Consumer Spending
Business Income
1. _________________________
1. _________________________
Product
Market
Goods Purchased
Goods Offered
1. ___________________________
1. ______________________________
2. ___________________________
2. _______________________________
Firm
Household
1. ________________________
Firm 1. _____________________________
Firm 2. _____________________________
Input for Production
Factor of Production Offered
1. ___________________________
1. ___________________________
Weekly Income
1. __________________
Factor
Market
Payments for F.O.P
1. _________________
Daily Assignment - Circular Flow Model of Economic Activity
Consumer Spending
Business Income
1. _________________________
1. _________________________
Product
Market
Goods Purchased
Goods Offered
1. ___________________________
1. ______________________________
2. ___________________________
2. _______________________________
Firm
Household
1. ________________________
Firm 1. _____________________________
Firm 2. _____________________________
Input for Production
Factor of Production Offered
1. ___________________________
1. ___________________________
Weekly Income
1. __________________
Factor
Market
Payments for F.O.P
1. _________________
Circular Flow Model of Economic Activity
Consumer Spending
Business Income
9.49
1. _________________________
1. _________________________
9.49
Product
Market
Goods Purchased
Goods Offered
Tacos
Burritos
2. ___________________________
Fajitas
Fajitas
1. ___________________________
1. ______________________________
3.___________________________
Household
Elisa
1. ________________________
Marcella
2. ________________________
Firm
Cilantros
Firm 1. _____________________________
Books a Million
Firm 2. _____________________________
Input for Production
Factor of Production Offered
1.
Labor/Salesperson
1. ___________________________
2.
3.
Weekly Income
200
1. __________________
Factor
Market
Stockers
_________________________
Coffee Sellers
_________________________
Cashiers
________________________
Payments for F.O.P
3000- Lease
1. ________________
2200 – Electric
2. ________________
3. ________________
400 - Water
American Free Enterprise
Economic
Freedom
Competition
Private Property
Rights
Self-Interest
Voluntary
Exchange
Profit Motive
Description
Description
Description
Description
Description
Description
Example
Example
Example
Example
Example
Example
1.
1.
1.
1.
1.
Economic Freedom




Description - Individuals’ right to choose your occupation and what to buy.
 Firms’ right to hire or produce.
 The right to conduct yourself with little government interference.
Examples:
1. I had the freedom to become a teacher and a coach; I can buy whatever I
want.
2. Firms range from automakers to fast food.
Voluntary Exchange



When individuals willingly engage in a transaction where both parties benefit.
Allows people to decide what and when they want to buy and sell, rather than forcing them to
buy and sell at particular times or specific prices
Examples:
 When I get a haircut, I get a fresh look, Sportsclips gets my money
 When I buy gasoline, I get energy for my car, the firm gets my money
Private Property Rights


Description – Individuals and businesses have the right to buy and sell as much
property as they want
 Property owners can prohibit others from using their property
 The fifth amendment protects us from the federal or state governments taking
our property for their own use.
Examples:
 Households and firms are encouraged to own property and enjoy the protection
of the property
 Firms can own and operate their business with limited interference from the
government
Profit Motive


The force that encourages people and organizations to improve their material well-being
Examples
 Many people in our society are driven by the desire to make money, which ultimately
benefits the market
 People in the U.S. are rewarded for innovations and efficiency via cash incentives
Competition


Competition – efforts among sellers/producers to attract
consumers at various prices
 At the heart of market economic philosophy
Examples:
 Mcdonalds vs. Burger King
 Walmart vs. Target
Circular Flow Model of a Mixed Economy
Consumer Spending/Investing
Business Income/Revenue
Product
Market
Goods and Services
Sold
Goods and
Services
Purchased:
Households
Expenditures
Expenditures
Land, Labor,
Capital,
Entrepreneur
Income to Households/Individuals
Firms
Inputs for
Production
(F.O.P.)
Factor
Market
Payment for F.O.P. –
Wages, rent,
capital goods
Role of the Government in a Market Economy


Government acts an informer, protector, provider, and regulator
Government has the responsibility to protect property rights,
contracts and other business activities
Role of the Government in a Market Economy

Government has the responsibility to protect property rights,
honor contracts, protect against discrimination, monopolies or
unfair business practices
Role of the Government as Informer

Role of the Government as Informer:


Make sure that producers provide consumers with accurate information
Consumers use govt. info. to protect themselves from dangerous products and fraudulent
claims.
Role of Government as Regulator



Role of government as a protector:
Federal government acts to preserve competition, regulates airlines,
communications, banking, etc.
Though they do not control it, they impose various restrictions on the private
market
Gas stations, must dispose of used motor oil properly
 Zoning laws, prevent homeowners from running businesses out of their homes

Negative Effects of Regulation


Government regulation can have negative effects on businesses and consumers
Negative effects:
1. Government rules can increase the cost of business
2. Stifled competition can lead to high prices
3. Increase of governmental spending can lead to higher taxes
Government as a Provider


Public sector- the part of the economy that involves the goods
provided by the government
Private sector- the part of the economy that involves the goods
provided by private firms
Public Goods and Services

Public Good/Service - A shared good or service for which it would
be impractical to make consumers pay individually and to exclude
nonpayers.

Education, military, National Park, Snow Removal, Fireman
Redistribution of Income


When the government takes from one group and reallocates
to another group
Welfare, Social Security, Unemployment, Food Stamps, etc.
Market Failure

The market, on its own, does not distribute resources efficiently,
choices made by individuals determine what goods get made,
how, and how much

Free riders, monopoly, roads and bridges in a sparsely populated area, etc.
Negative Externalities

Negative Externality – negative effects experienced by people that had no part in
the consumption of a good or service
 Cigarette smoker, chemical waste dumping, foreclosures and property values,
etc.
Negative Externalities

Negative Externality – negative effects experienced by people that had no part in
the consumption of a good or service
Positive Externalities

Goods/services that generate benefits to many people,
not just those who pay for the goods

Education, better technology, medicine, etc.
Free-Rider Problem

A free rider is someone who would not choose to
pay for a certain good or service, but who would
get the benefits of it anyway if it were provided as
a public good
Application Question


Write an example of a negative and positive externality.
What kind of government regulation could be used to
eliminate your negative externality?
Command Economies


Command – central authority owns and operates the Factors of Production
Centrally Planned Economy – central government answers the three
economic questions; WHAT to produce, HOW to produce, and FOR
WHOM to produce
 Oppose private property, free market pricing, economic freedom
Socialism and Communism




Karl Marx – German social philosopher that studied economic systems in Europe

Communist Manifesto – written by Marx and Frederick Engels became basis for
modern-day command economies

Thought capitalism would fail because it put too much wealth in the hands of few and
left everyone else poor

Believed in a “no-class” system, where all share in wealth/power
Socialism – distribution of wealth and F.O.P. equally amongst society
Communism – political and economic system with centralized economic decision-making
Authoritarian Government – exact strict obedience from their citizens; do not allow
individual freedom
Chapter 2 Section 2 – Daily Assignment
Economic Profile Adam Smith pgs. 33
1.
2.
3.
What was Adam Smith’s ethnic and professional background?
•Scottish, Philosopher, Professor
What was the name of the book that he published; when was it published?
•Wealth of Nations
What did Smith identify in the book?
•Land, labor and capital as the factors of production that generate wealth
4.
What did he assert about specialization and division of labor?
•Productivity increases through specialization
5.
What did he believe about the role of government in the economy?
•Government must leave individuals as free as possible to pursue their interests
6.
Define the French term Laissez Faire; why did Smith believe in Laissez-Faire
economics?
•Individuals try to pursue their own self-interest will benefit all of society
7.
What is meant by his metaphor of the Invisible Hand?
• Let them do as they please
8.
How do both consumers and businesses benefit from this philosophy?
•Consumers buy what they want, producers supply for profit
Chapter 2 Section 3 – Daily Assignment Questions
“The Former Soviet Union” pgs. 36-38
How did the Soviet Union arise?
2.
Where did Soviet planners allocate the factors
of production?
3.
How did the Soviet Union control agriculture?
4.
What three industries did Soviet Planners
favor?
5.
How did the Soviet Union view entrepreneurial
endeavors?
6.
What was the quote used by Soviet consumers
as a joke?
7.
Why were Soviet Consumers’ left unsatisfied?
Page 39 – Russia in Crisis
1.
How did many Russians initially respond to the
Communist collapse?
2.
What happened over the next decade?
3.
How did Russia deal with corruption?
4.
What were some characteristics of Russia’s
financial problems?
5.
What evidence can be seen that success is in
sight?
1.
Scenario 1
You have two cows.
You trade one to your neighbour for a bull.
You only produce what you need to survive.

Scenario 2
You have two cows.
The State takes both and gives you just enough
milk to live

Scenario 3
You have two cows.
You sell one and buy a bull.
Your herd multiplies, and your wealth grows.
You sell your herd and retire on the income.

1.
2.
3.
4.
What economic system matches each
scenario?
Which scenario do you think is the most
ideal and why?
Which scenario do you think sounds the
most like the United States? Why?
What countries do you know of that could
fall into scenario 2.
Tradition
Command
Market
What to
Produce?
Whatever is
necessary for the
tribe to survive.
Whatever the
government tells
them to produce.
Whatever is in
demand by the
consumers.
How to
Produce
it?
Based on tradition,
habit and custom; the
way its always been
done.
Based on the
government.
The most efficient
method possible;
technological
innovations.
For Whom
to
Produce?
The tribe
Whoever the
government tells
them to produce it
for.
Consumers that are
willing to purchase.
Examples
Tradition
1.
Central African Mbuti
1.
North Korea
2.
Australian Aborigines
2.
Cuba
3.
Inuits of Canada
3.
China
4.
Former Soviet Union
1.
Change economic
direction in a short
time
Health and public
services are available
at little or no cost
(regardless of income)
Advantages
1.
Everyone knows their
role in
society/economy
2.
2.
1.
Disadvantages
Command
Economic questions
are answered based
on tradition
Discourages new ideas
1. Not designed to meet wants
of consumers
work hard
Lack of progress, lower
standard of living
1.
2.
3.
4.
5.
6.
7.
8.
9.
United States
Canada
Japan
South Korea
Singapore
Germany
France
Great Britain
Western Europe
1. Adjust to change over time
2. Individual economic freedom
3. Limited government interference
4. Decision-making is decentralized
5. Variety of goods and services
6. High degree of consumer
satisfaction
2. Does not give incentive to
2.
Market
3. Large decision-making
bureaucracy
4. Lack of economic flexibility
Lack of economic freedom,
5. profit motive
1. Does not provide basic needs for
everyone
2. Lack of public goods by private
markets
3. High degree of uncertainty, job
loss, competition
4. Market failures (monopoly)
1. What traditions are mentioned regarding American society?
•Thanksgiving, bouquet toss, shaking hands
2. List some additional traditions that you have in your family.
• Open one present on Christmas Eve
3. How did the Inuit exemplify a traditional economic system?
•Share the spoils of the hunt
4. How did the State Planning Commission determine the direction of the Soviet
economy?
• Determined the needs based on governmental decisions
5. What shortcut did Soviet workers take in order to fill their quotas; what did it lead to?
• Made their products heavier
6. How did the State Planning Commission respond to a shortage of male workers?
• Made the women go to work
7. Describe what a “dollar vote” indicates.
• Spending money to show firms what to produce
8. Describe how the market adjusted from the 1970s gas shortage, to the 1980s.
• People bought less gas-guzzling cars and bought more fuel-efficient ones
9. What examples are provided of the various goods and services provided in a market
economy?
• Internet, electric dog collars, Cable TV
10.How do both the majority and minority end up satisfied in a market economy?
• Both can get what they want
11.What are the three conditions that must be met to ensure that market economies do
not fail? • Competition, Flexibility, Access to information
Modern Economies


Free Enterprise – competition in the marketplace is allowed to flourish
with no interference from government
Modified Free Enterprise (mixed economy) – businesses are free to
compete with some government regulation/intervention
Centrally Planned
Free Market
Mexico
North Korea
France
Hong Kong
Iran
South Africa
Cuba
United Kingdom
Canada
China
Poland
Japan
United States
Singapore
Laissez Faire in a Modern Economy


Laissez Faire – no government intervention in the economy
Some government intervention is necessary in the economy; some needs
are difficult to answer in the marketplace
 National defense, roads and highways, education, etc…
 Government acts a protector, regulator and overseer of economy
Government Money

Taxes from both households and businesses
 Income tax, state income tax, social security, Medicare/Medicaid,
unemployment insurance, etc.
Government in the Factor Market


Government purchases land, labor, and capital from households
United States gov’t pays 2.8 million employees $9.7 billion for labor
Government in the Product Market

Government purchases goods and services from firms (businesses)
 Office supplies, telephones, computers, etc.
Economic Goals
Market
Command
Tradition
Economic Freedom
Yes - People can produce what
they want, how they want to
and for whom
No - Many aspects of economic
activity are tightly controlled by
the government
No - Extremely limited, a person’s
role in society is based on custom,
heritage and tradition
Economic Efficiency
Yes – specialization, wise
use of resources leads to
profit
No – Many resources go
unused, Cuba 50% of fertile
land is not utilized
Yes/No – Tribal living does not
waste resources/lack modern
standards of efficiency and growth
Economic Security
No – a pure market economy
prescribes to laissez faire.
(mixed economies have some
safeguards)
Yes - employment and
government sponsored
programs are assured
Some – your job and
provisions are guaranteed
by your tribe
Economic Predictability
Yes – most market
No – command economies
economies have high levels struggle to meet the needs
of resource predictability
of the consumer
No – in most cases
unpredictable, because
resources can become scarce
Economic Equity
Yes – fairly paid based on
your skills
No – based on customary
means of production not
fair pay for acquired skills
Economic Growth
Yes - a fast rate due to
competition and profit
motive
Economic Innovation
Yes – innovation and
technology leads to profit
No – private incentive,
profit motive do not exist
Slow - lack of growth
because of a lack of
efficiency and profit motive
Limited – lack of
innovation because of a
lack of profit motive
No - lack of growth due to
a lack of productivity and
innovation
No – lack of modern
innovations
Chapter 2 – VIS Terms
1. Traditional Economy
15. Socialism
2. Command Economy
16. Communism
3. Market Economy
17. Authoritarian
4. Market
18. Laissez-Faire
5. Free Market
6. Specialization
7. Division of Labor
8. Household
9. Consumer
10. Firm
11. Supplier
12. Product Market
13. Factor Market
14. Centrally Planned
Economy
Junk!!!
Using the Chart Below, identify each groups Economic Goals and
Societal Values and the picture they used to represent each goal.
Group Number
Economic Goal
Picture
1.
2.
3.
4.
5.
Name
Date (1-30)
Class Period
Chapter 2 Test
ID: A, B, C
Junk!!!
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Economic Systems D.A.
Video Questions - North Korea
Circular Flow (Elisa and Marcella)
Comparing Economic Systems Reflection Questions and Chart
Free Enterprise Flow Chart
Study Guide Chapter 2
CW Puzzle
Terms Ch. 2
Daily Tens (9)
Essential Questions (3)
Notes
Test Standard Sheet (include original
test answers + corrections)
Junk!!!
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Economic System
What to produce, How to produce them,
Who to produce them for
Economic: efficiency, freedom, security,
predictability, equity, growth, innovation,
additional goals
Tradition, custom, ritual, habit
Central planners dictate the what, how, for
whom
Buying and selling of households and firms
Market
Market economy
Capitalism
Households and Firms
Input is something used to produce and
output, which is a final good or service
Product
Factor
Adam Smith, Wealth of Nations
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Be limited in its role in the economy, “Let them
do as they please”.
Invisible Hand
See Circular Flow
a) Product
b) when it changed hands from the household
to the firm
c) Factor, labor
d) Grills, hostesses, cashiers
e) Factor
Karl Marx, Communist Manifesto
That it would fail because it put too much
money in the hands of the rich and not in the
hands of the poor
Communism, Socialism
Authoritarian
Economic Freedom
Property Rights
Profit Motive
Voluntary Exchange
Competition
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5.
Name
Date (9-4)
Class Period
ID: A, B or C
Test Economics Systems
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Economic Freedom
Property Rights
Profit Motive
Voluntary Exchange
Competition
Extra Credit
1. Give an example of a
positive and negative
incentive.
2. Explain why the United
States is not a true “pure
market/free enterprise”
system.
Extra Credit
1. Which type of economic
system do you think is the best
method for allocating scarce
resources? Explain why.
2. Other than the goal that you
identified on your test, write the
one that you think is the next
most important. Explain why.
Economic Goal and
Societal Values
1.
Economic Efficiency
2.
Economic Freedom
3.
Economic Security
and Predictability
4.
Economic Equity
5.
Economic Growth
and Innovation
6.
Additional Goals
Summary
Making the most of scarce
resources
Freedom from government
intervention in the production
and distribution of
goods/services
Knowing that goods and services
will be available, payments made on
time, government will provide a
safety net in times of economic
downturns
Fairness, being paid according to
your skill level, not being
discriminated against
Example
Manufacturer knowing the
best way to use resources
wisely (Assembly Line)
Working where you want,
spending money the way that
you want, owning a
business, etc.
Security – Unemployment
Checks, Social Security,
Stimulus Money
Predictability – gas at gas
pumps, food at store
Lawyers earn more than
nurses, computer programmers
more than truck drivers
Economic growth refers to
improving standard of living and
GDP. Innovation, improving existing
technology.
Agricultural age to industrial
age to information age.
Innovations in computers,
communication.
Future goal for society.
Environmental protection, full
employment, universal medical
care.
Circular Flow Model of Economic Activity
Consumer Spending/Investing
Business Income/Revenue
Product
Market
Goods and Services
Purchased:
Caramel Frappuccino
Goods and Services Sold
Firms
Households
Land, Labor, Capital,
Entrepreneurs
Inputs for
Production
(F.O.P.)
Factor
Market
Income to Households/Individuals
Payment for F.O.P. –
Wages, rent,
capital goods
Essential Question #1 +2
How do each of the economic systems answer the three economic questions?
1.
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4.
Tradition – based on habit, ritual, custom
Market - based on buyers and sellers
Command – based on central planners/government
Mixed – market based with some government regulation
How does the Circular Flow model show a market economy?
2.
Flow of money from households to firms (product market), firms to
households (factor market).
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Flow of final goods and services (outputs) to households (product
market), and factors of production (inputs) to the firm (factor market).
3. What do the economic and social goals help us to understand?
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Explain how each society provide goods and services for their people in light
of scarce resources.
Essential Question #1
1.
How do each of the economic systems answer the three economic questions?
1.
2.
3.
Tradition – based on habit, ritual, custom
Market - based on buyers and sellers
Command – based on central planners/government
Essential Question # 3
3. What do the economic and social goals
help us to understand?
•
Explain how each society provide goods
and services for their people in light of
scarce resources.
Vince Lombardi “What it Takes To Be Number 1”
"Winning is not a sometime thing; it's an all the
time thing. You don't win once in a while; you
don't do things right once in a while; you do
them right all the time. Winning is a habit.
Unfortunately, so is losing. There is no room for
second place. There is only one place in my
game, and that's first place. I have finished
second twice in my time at Green Bay, and I
don't ever want to finish second again. There is
a second place bowl game, but it is a game for
losers played by losers. It is and always has
been an American zeal to be first in anything
we do, and to win, and to win, and to win.
Every time a football player goes to play his
trade he's got to play from the ground up-from
the soles of his feet right up to his head. Every
inch of him has to play. Some guys play with
their heads. That's O.K. You've got to be smart
to be number one in any business. But more
importantly, you've got to play with your heart,
with every fiber of your body. If you're lucky
enough to find a guy with a lot of head and a
lot of heart, he's never going to come off the
field second.
Vince Lombardi “What it Takes To Be Number 1”
Running a football team is no different than
running any other kind of organization-an army, a
political party or a business. The principles are the
same. The object is to win-to beat the other guy.
Maybe that sounds hard or cruel. I don't think it is.
It is a reality of life that men are competitive and
the most competitive games draw the most
competitive men. That's why they are there-to
compete. To know the rules and objectives when
they get in the game. The object is to win fairly,
squarely, by the rules-but to win. And in truth, I've
never known a man worth his salt who in the long
run, deep down in his heart, didn't appreciate the
grind, the discipline. There is something in good
men that really yearns for discipline and the harsh
reality of head to head combat. I don't say these
things because I believe in the "brute" nature of
man or that men must be brutalized to be
combative. I believe in God, and I believe in
human decency. But I firmly believe that any
man's finest hour, the greatest fulfillment of all that
he holds dear, is that moment when he has
worked his heart out in a good cause and lies
exhausted on the field of battle - victorious."
...Vince Lombardi
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Do you agree with Vincent
Lombardi’s assertion that
people are born with the
desire to compete why or
why not?
What areas do you see
competition in the
economy of the United
States ?
How is competition
beneficial to our
economy/society?
How is it harmful to our
economy/society?