LEQ’sWhat are limited resources?

What are the 3 economic questions that every

society must answer?What are the similarities and differences between the various types of economic systems?

Make a list of the ten things you most want (things that you can buy). Money is no object!

Which of these are REALLY necessary for you to survive?

(necessary for life!)

Therefore, are these things WANTS or NEEDS?

Now, make a list of the top ten things you think you will need in

order to live a good life.

Comparing your two lists, first choice to first choice, second choice to second choice, which will you choose in order

to have a good life?

What did you give up and for what did you give it up?

What is this called?

Opportunity cost

Opportunity Costs

Something that is given up in order to have something else

Opportunity Costs

Even countries have to look at opportunity costs.

What are some things that our country has given up in order to gain other things?

Every country relies on its resources.

An abundance of resources NORMALLY = a wealthy country

(ex. of exceptions … corrupt government)

A lack of resources = poor country

So, what are resources?

Resources

Role of Resources

Should Kansas invest money in the lobster industry?

Should Florida invest money in the snow skiing industry?

Should Alaska invest money in the citrus fruit industry?

Why?

Would the Alaskan crab industry be a good industry for Alaska?

Would promoting beaches be a good industry for Florida?

Why?

Role of Resources

Normally, the availability of natural resources will dictate the answers to the question

… what will that region

produced?

Role of Resources

Alaska has the largest Alaskan crab industry in the United States.

Florida has the largest tourism industry in the United States.

Georgia has the largest peach industry in the United States.

Therefore, these states have developed specific industries based on the availability of natural resources. What is this called?

Specialization

How does SPECIALIZATION help a country?

What does Alaska specialize in? How does this help Alaska?

What does Kansas specialize in? How does this help Kansas?

What does Georgia specialize in? How does this help Georgia?

What does Saudi Arabia specialize in? How does this help Saudi Arabia?

What does the US specialize in? How does this help the US?

The 3 groups of resourcesLand Capital

Labor

Resources divided into 3 groups

Resources

landLabor

capital

Land is not just the soil, but also…

Plants

Animals

Water

Metals

Resources

Land• Plants• Water

• Animals• Metals

• oil

Laborcapital

Labor is the work people do. It includes…

Providing goods like……and providing services like…

A butcher, a baker, and a candlestick

maker.

Entertaining, firefighting,

and protection.

Capital …

buildingsmachines

tools…goods used to make other goods

But does capital refer to just goods?What other type of capital do we have?

Capital also refers to HUMAN capital.

How can a country invest in human capital?

Investing in education

Investing in health care

Investing in training people in

specific skills

How might a country benefit from investing in human capital?

What type of resources do you see in the following photo?

Resources

Land• Plants• Water

• Animals• Metals

• Oil

Labor• The work

people do• Goods

• Services

Capital• Goods to

make other

goods • Building

s• Machine

s• tools

• Human capital

• Education

• Training • Health

care

Make sure your graphic

organizer includes this information

These 3 groups of resources are also called…

Land Capital

…the factors of production.

Labor

Which of these are limited?

Land Capital

All of them!

Labor

Now the we understand

resources, let’s now look at economic systems!

3 basic questions of economics that every country has to answer …

What will be produced?How will it be produced?For whom will it be produced?

The rules a country follows in answering the 3 basic questions

are called…

4 kinds of economic systems

Traditional economyCommand economyMarket economyMixed economy

What do you think are the following types of economic

systems?

Folks answer the 3 basic questions by

producing what their families have always

produced.

The government answers the 3 basic questions and tells

people what they will produce.

Folks answer the 3 basic questions by

producing what they want to produce and selling their goods in

the market.

Some folks produce what they want; the government controls

the other.

Traditional Command

Market Mixed

Billy Bob grows corn because his father grew corn, and his grandfather grew

corn.

Scenarios …

Traditional Zululand’s government

determined that one village would grow corn

and the other peas.

Sally Sue sells sea shells and Peter Piper picks prickly peppers

and pears.

Blueland’s government owns the

oil production, but Bobby Jo sells the

drills.

Command

MarketMixed

Based on what has been done in the past.

The question of “how should goods and services be produced?” is answered by “what have we always done?” People herd cattle because

their families have always herded cattle

People farm because their families have always farmed

Government leaders decide the answers to the basic economic questions.

The government controls the land, labor, and capital.

The government decides what will be produced, how it will be produced,

and for whom it will be produced. And often times …

Where people will work How much will they be paid

Each person answers the 3 economic questionsPeople buy and sell whatever they like

People decide for themselves where they will work

The most important part of a market economy is the market

Mixed Government has some say over 3 basic questions

However, many decisions are made by the people

4 things that make a market system work…

CompetitionProfitPrivate propertyFreedom of exchange

How do these elements affect the market system?

How would the market system be different if one of these elements were missing?

Let’s see how each of these

elements impact the market system!

I need volunteers!

Note … Most systems not just one or the other … most lie somewhere in between.

Pure Command Mixed Pure Market

Now that we understand economic

systems, let’s look at what can hurt an economy!

Make a list of everything that you know of that can hurt a country’s economy.

Elements that can negatively affect a country’s economy …

Natural disasters Volcanoes / earthquakes Weather

Flooding Snow storms Hurricane

Conflict Strikes Boycotts UnemploymentTrade barriers

Your thoughts … what do you think

can negatively affect a country’s

economy?Working with your

partner, how many elements

can you and your partner list?

Trade Barriers … Which definition goes with which term?

TariffsQuotasEmbargos

A tax imposed by a government on imports

The limit on a number of items that can be imported into a

country.

A restriction on foreign trade, usually meant to hurt the other

country

How do each of these barriers

impact the price of a product?

Free Trade Agreement

What does free trade mean?

Who does the US have a free trade agreement with?

The absence of trade barriers.

• Today, the United States has FTAs with 17 countries, such as Israel, Jordan, Canada, Oman, and

Singapore to name a few.• In 2006, six new FTAs were implemented: with Bahrain,

El Salvador, Guatemala, Honduras, Morocco, and Nicaragua.

What can we determine about our

trading industry

based on this chart?

Words to know…Economic systemTraditional economyMarket economyMixed economyCommand economyFactors of

production3 basic questions of

economicsOpportunity costTariffs

QuotasEmbargoesFree trade

Ticket out the door…

What are limited resources?What are the 3 economic questions that every society must answer?

What are the similarities and differences between the various types of economic systems?

Answer the following essential questions …

Share your notes with a partner to ensure your notes

are complete!

A good is something that is made by people.

A service is action people do for others.