ECONOMICS - DAY 2
Introduction to Business & Marketing
REVIEW
What is Economy?
 What are Resources?
 What are Factors of Production?

Land
 Labor
 Capital
 Entrepreneurship

ACTIVITY
Identify each of the following with appropriate Factor of
Production: land, labor, capital, entrepreneurship
1. You plan to make and sell custom skateboards.
2.
Both you and your friend have part-time jobs at a
woodworking factory.
3. You will decorate the boards by using dried leaves.
4. You have been able to buy materials for 15 boards.
ACTIVITY ANSWERS
Identify each of the following with appropriate Factor of
Production: land, labor, capital, entrepreneurship
You plan to make and sell custom skateboards.
- entrepreneurship
2. Both you and your friend have part-time jobs at a
woodworking factory.
- labor
3. You will decorate the boards by using dried leaves.
- land
4. You have been able to buy materials for 15 boards.
- capital
1.
HOW DOES AN ECONOMY WORK

There are three fundamental economic questions:
1.
2.
3.
What goods & services should be produced?
How should goods & services be produced?
For who should goods & services be produced?
TYPES OF ECONOMIES



Market Economy – no government involvement
Command Economy – government makes all
decisions
Mixed Economy – combination of Market and
Command
MARKET ECONOMY
There is no government involvement in economic
decisions
 WHAT: consumers decide what to produce goods
& services
 HOW: businesses decided how to produce goods
& services
 FOR WHOM: the people with more money are
able to buy more goods & services

COMMAND ECONOMY
Government has complete involvement in
economic decisions
 WHAT: one person (dictator) decides what to
produce goods & services
 HOW: the government owns ALL means of
production and runs all businesses
 FOR WHOM: the government decides who
receives goods & services

MIXED ECONOMY

Combination of Market & Command economy

USA is a Mixed Economy
WHAT: the people & government decide together
what to produce goods & services
 HOW: the people & government decide together
how to produce goods & services
 FOR WHOM: the people & government decide
together who receives the goods & services

HOW TO MEASURE AN ECONOMY?

Economic indicators that measure an economy:






Productivity: output per worker hour measured over
period of time
Gross Domestic Product (GDP): output of goods &
services produced by labor
Standard of Living: level of material comfort in terms
of products available to a group of people
Consumer Price Index (CPI): measures change in
price over a time period
Consumer Confidence: degree of optimism that
consumers feel about the overall state of the economy
Unemployment Rate: percentage of workforce that is
unemployed at any given date
WHAT MAKES A HEALTHY ECONOMY?

The characteristics of a healthy economy are:
high productivity
 stable prices
 low unemployment

VOCABULARY NOTEBOOK
VOCAB TERM
DEFINITION
PHOTO
the organized way a nation
provides for the needs and
wants of its people
1. Economy
You will draw a photo of
something that helps you
remember this term – keep it
simple!
Vocabulary Terms:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Economy
Resources
Factors of production (list all 4)
Land
Labor
Capital
Entrepreneurship
Market economy
Command economy
Mixed economy