Daily Warm up Question (use your Cornell Notes)
Why are some countries rich and others poor? Look at the map and write a
well thought out paragraph using examples from the map
Low, Middle and High Income
Unit One: Learning Objectives:
North Clackamas School District Social Studies
Priority Standards:
• Econ 53. Describe characteristics of
command, market, traditional, and mixed
economies and how they affect jobs and
standards of living.
• Econ 59. Demonstrate the skills and
dispositions needed to be a critical consumer of
information.
Lesson Three: Daily Learning Target
A. I Can and explain in writing the three
economic systems:
•
•
•
Command Economies
Traditional Economies
Market Economies
B. I Can and explain in writing the three Key
questions for economic systems.
WE WILL BE USING CORNELL NOTE
TAKING FORMAT TODAY
The Three Key
Questions for
Economic
Systems
Institutions, institutions,
institutions
• The answer to our question seems to lie in the
political and legal institutions of each nation
– Rule of law—what you own depends not on force or who
you know, but is protected by law that treat all persons
equally
– Private property rights—the rights to use and sell resources
are clearly defined, cheaply enforceable, and fully
transferable
– Open markets—people are free to buy and sell when, where
and to or from whom they wish, including citizens of other
nations
Effects of institutions
• Secure property rights, rule of law, and open
markets encourage people to make long term
investments in human and physical capital
– Education, buildings, innovation, land quality,
infrastructure, etc
– These investments raise the capital stock—both
physical and human capital stocks
– This in turn generates income over the long run,
raising living standards and human well being
Key Assumptions in Economics
• People are rationally self-interested
– They seek to maximize their utility
• People generally make decisions at the margin
– They weigh the marginal benefit against the marginal
cost of a decision
Three Economic Questions
•
Every society must answer three economic
questions…
1. WHAT?
2. HOW?
3. FOR WHOM?
•
How that society answers the questions
determines which type of economic system
that society employs
WHAT TO PRODUCE?
• WHAT goods and services
will be produced with the
available resources?
Resources a.k.a. The Factors of
Production
•
Economists classify resources into 4 categories
1.
Land
•
•
2.
Natural resources
The payment for Land is RENT
Labor
•
•
3.
Human resources
The payment for Labor is WAGES
Capital (a product of Investment)
•
•
4.
Tools, machines, factories
The payment for Capital is INTEREST
Entrepreneurship
•
•
The special ability of risk-takers to combine land,
labor and capital in new ways in order to make profit
The payment for Entrepreneurship is PROFIT
Check for Understanding
Take Out a separate piece of paper you will turn in at the end of class
1. Now that you know these terms, let’s see if we can use them to solve sort
these factors. At the top of a paper write Natural Resources , Human
Resources and Capital Goods . Place these items under the correct
heading.
• Delivery Truck
• Factory worker
• ATM machine
• River
• Gold
• Teacher * River
• Tree
• Bushel of corn
• Hair stylist
• Barrel of oil
* Bulldozer
* Farmer
* Doctor
Do we all agree on the placement of these items?
Factors cont’d
Let’s consider some other questions about
productive resources.
2. Are the factors interdependent? (In other
words, do the factors affect one another?)
3. Land is considered a “passive” factor. Why?
4. How do capital and labor differ from land?
Answer Key
Natural
Resources
Human
Resources
• Tree
• Bushel of
corn
• River
• Gold
• Barrel of oil
•
•
•
•
•
Capital Goods
• Delivery
Teacher
truck
Hair stylist • Factory
Doctor
• ATM
machine
Farmer
• Bulldozer
Factory
worker
• Tractor
HOW TO PRODUCE?
• HOW will the available
resources be combined to
produce goods and services?
FOR WHOM TO PRODUCE?
• WHOM will be the
consumer of the product or
service?
Three Economic Systems
• Command Economies
• Traditional Economies
• Market Economies
MARKET ECONOMIES
• Answer the key questions by a system of supply and
demand. (in other words, it allows buyers and sellers
to voluntarily exchange things)
• The ability of markets to coordinate economic activity
is emphasized by Adam Smith in
“The Wealth of Nations.”
– This is what he referred to as
the Invisible Hand
The Invisible Hand
...every individual necessarily labours to render the annual revenue of
the society as great as he can. He generally, indeed, neither intends to
promote the public interest, nor knows how much he is promoting it.
By preferring the support of domestic to that of foreign industry, he
intends only his own security; and by directing that industry in such a
manner as its produce may be of the greatest value, 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 no part of his intention. Nor is it
always the worse for the society that it was no part of it. By pursuing
his own interest he frequently promotes that of the society more
effectually than when he really intends to promote it. I have never
known much good done by those who affected to trade for the public
good.
Invisible Hand
• What is Adam Smith basically saying with
this passage?
– If individuals are allowed to pursue their own selfinterest, then the often times the result will be a
more efficient economy. There is NO PLANNING
5. What do you think Adam Smith envisioned as
the role of Government in the economy?
COMMAND ECONOMIES
• Answer the key questions through a central
authority made up of an individual or a
number of individuals who make the decisions
of what to make, how to make it, and for whom
things should be made. (Self-Interest and
Competition are absent)
– Communism
– Socialism
TRADITIONAL ECONOMIES
Answer the key questions by relying on past
customs and practices:
“The Inuit of northern Canada serve as a prime
example of a traditional economy. For thousands of
years, the Inuit parents have taught their children the
survival skills needed to survive in the Arctic Circle's
severe climate. The children are taught to fish, hunt,
and make effective tools. Once learned, these skills
are passed down to the next generation.”
Since it is cold most of the year the people could not become farmers so they were hunters
and gatherers.
Because food was scarce, they could not live in the same place all the time.
They had to keep moving, following the herds.
Of all the animals, the CARIBOU was the most important.
It provided food and warm fur to make clothes. More than one hundred bird species nest
during the summer, and many were hunted as well as sought out for their EGGS.
Land animals also included musk ox, bears, wolves, wolverines, lynx, foxes, weasels, mink,
rabbits, and many rodents.
FISH, including salmon, trout, herring, halibut, and cod were prevalent and many Arctic
peoples made use of them.
DRYING MEAT
Male (left), female (center), and male (right)
SEALS and WALRUS were the most important marine mammals.
The Arctic Ocean supports nineteen whale species, numerous seal species, and walrus.
The people developing specialized tools for sea mammal hunting throughout the Arctic.
Because air-breathing seals need to break through the ice to reach air, they form
breathing holes with their claws.
Through these, hunters are able to capture seals.
When the seal comes up, the hunter notices movement and uses his harpoon to capture
the seal in the water.
They made WATERPROOF rain gear from the intestines of sea mammals.
FUR for warmth was as prized as meat for food.
They made ice-free mittens from polar bear fur.
They used soft caribou skin to make tailored pants and shirts and boots.
They had hooded coats.
They put polar bear fur around the hood, again to keep ice away from their face.
Ice does not STICK to polar bear fur.
The snow in the Arctic area can make a person unable to see.
When the bright sun reflects back on white snow, it makes rays that are damaging to the
eyes.
These rays give the eyes a kind of sunburn.
The people in this area learned how to protect their eyes by making SNOW GOGGLES.
Arctic people have long made snow goggles to protect their eyes from SNOW BLINDNESS.
They usually made them out of wood, bone, or shell.
Today, Arctic people wear modern sunglasses or snow goggles often made with polarized
lenses.
The type of homes depended on (1) The kinds of MATERIALS they could find nearby.
(2) The kind of WEATHER they had to shelter from.
(3) How often they MOVED from place to place.
In the summer they often lived in tent-like shelters made of caribou or seal hides with
driftwood or whale bone frames.
DRIFTWOOD is wood that has been washed onto a shore or beach of a sea, lake, or river by
the action of winds, tides, or waves.
IGLU is the Inuit word for a house or home.
With a crawl-through door on the downhill side of the house the heat would naturally stay
inside.
HIDES
HIDES
DRIFTWOOD
While hunting out on the ice they would build IGLOOS as a temporary shelter.
An IGLOO or snow house is a type of shelter built out of snow, originally built by the Inuit.
CUT BLOCKS
FORM A CIRCLE
WITH BLOCKS
BUILD UP WALLS,
OVERLAPPING THE BLOCKS
AND SHAPING THEM SO
THAT THEY LEAN INWARD
LAST BLOCK
Activity
• Need four volunteers…
– Round 1:
• Part A: when I say go you can try and grab as many
paper clips as possible…for every paper clip that you
grab you will 1 m and m
Activity
– Round 2:
• Part B: when I say go you can try and grab as many
paper clips as possible from your section…for every
paper clip that you grab you will get 1 m and m
Activity
• Discuss what just happened
Think: Where would you Place the U.S.?
• On a scale of 1 to 10 (1 being completely
Command Economy & 10 being a Market
Economy); where would you place the United
States?
Now Write: Economic Spectrum
5. On a scale of 1 to 10 (1 being completely Command
Economy & 10 being a Market Economy); where would you
place the United States? Please explain why in a well crafted
detailed paragraph.
We will share out in table groups
In the United States we have what
is known as a MIXED
ECONOMY…in fact pretty much
every country is a mixed economy
combining aspects of command
and market economies.
1
The United States probably
would lie around 7 and 8
10
TANSTAA“F”L
There Ain’t No Such Thing As A
“FREE” Lunch
• NOTHING ON THIS EARTH IS FREE!!!!!
EVERYTHING HAS A PRICE…IN
THE EYES OF AN ECONOMIST!
Tomorrow
TANSTAAFL Illustrated:
The PPC
• The PPC = The Production Possibilities Curve
• The PPC = a graph showing all of the possible
combinations of output for an economy fully
employing all of its resources in producing 2 goods.
TANSTAAFL Illustrated: The PPC
Construction of Econ Graphs
Table of Values
INCOME
(per week)
CONSUMPTION
(per week)
$ 0 $ 50
100 100
200 150
300 200
400 250
CONSUMPTION (C)
$400
300
200
100
Vertical Axis
Construction of Econ Graphs
Table of Values
INCOME
(per week)
CONSUMPTION
(per week)
Vertical Axis
$ 0 $ 50
100 100
200 150
300 200
400 250
CONSUMPTION (C)
$400
300
200
Horizontal Axis
100
0
100
200
300
INCOME (Y)
400
Goals of Economic Systems
• Efficiency (maximize what you have)
• Freedom (ability to make choices)
• Security (goods/services will always be
available)
• Equity (Fairness, Opportunity)
• Growth (Economy must grow with population;
innovation)
Partner Practice-Econ Book-PPC
Skim pages 13-18 in the Economics
book with a partner
Answer questions 7-10 on page 18
Turn your answers into me
Work on your “Dollar Tree” list