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Economics – a social science concerned with how people satisfy their demand when the supply of the following is limited: Goods (things you can buy) Services (things people do for a fee)What is an Economic System?: What is an Economic System? Economics is about the flow of goods and services between people. Even though it is about mathematics, it is a social science because people play a central role in it.What is an Economic System: What is an Economic System People play a central role by purchasing their needs (essential items) and wants (items not necessary to survive). When there are not enough goods to meet those needs there is an economic situation called scarcityWhat is an Economic System?: What is an Economic System? An Economic System is a method used by a society to allocate goods and services among its people and to cope with scarcity. Factors that affect what kinds of economic systems: Politics Moral Issues Cultural DifferencesWhat is an Economic System?: What is an Economic System? Every economic system answers four basic questions which are the fundamentals of economics: What goods and services are produced? What quantity of goods and services are produced? How are goods and services produced? For whom are goods and services produced?Types of Economic Systems: Types of Economic Systems Command Economy The government controls the production, allocation, and prices of goods and services. Market Economy Suppliers and consumers control the production, allocation, and prices of goods and services. Mixed Economy Blend of a Command Economy and Market Economy. All modern countries are mixed, but lean heavily towards one or the other.Types of Economic Systems: Types of Economic Systems Command Economy Control what suppliers produce How much is produced How it is produced How goods are distributed throughout the country and the prices people pay for them.Types of Economic Systems: Types of Economic Systems Socialism and Communism are strongly associated. Although no country has a strict command economy, there are several that are close: China Russia Syria Iran Korea VietnamTypes of Economic Systems: Types of Economic Systems Suppliers produce whatever goods and services they wish and set prices on what consumers are willing to pay. Prices are responsive to consumer demand. Characterized by Voluntary Exchange (a transaction where both parties feel that they benefit)Types of Economic Systems: Types of Economic Systems Key Terms: Free Enterprise System – another name for a market economy. Capital – another name for cash and goods a business owns. Market Economy or free enterprise system is also referred to as capitalism. Examples of this type of economy: United States, Canada, Australia, Hong Kong.Supply & Demand: Supply & Demand Supply – the quantity of goods and services a business is willing to sell at a specific price. Demand – is the quantity of goods and services consumers are willing to buy Timing is key and important when figuring out the economy.Supply Curves: Supply Curves A supply curve on a graph shows the quantity of a product or service a supplier is willing to sell across a range of prices. Quantity is on X Axis, while Price is on Y AxisDemand Curves: Demand Curves A demand curve on a graph shows the quantity or service consumers are willing to buy. Axis on the demand graph are same as supply.Supply & Demand Curves: Supply & Demand Curves When you place both curves on the same graph you can identify the equilibrium price, which is the desired spot of supply and demand in an economy.Competition in a Market Economy: Competition in a Market Economy Competition Between Suppliers: If a supplier lowers prices, consumers typically buy from that supplier. This initiates an incentive for buyers. The other benefit of competition is that it forces companies to be innovative and create variety.Competition in a Market Economy: Competition in a Market Economy Competition Among Consumers: When consumers compete for products, it has a different effect. It pushes prices upward. Examples would be flowers at Valentine’s Day and toys at Christmas.What Drives Entrepreneurs? : What Drives Entrepreneurs? Profit Motive: Is an incentive that encourages entrepreneurs to take business risks in the hopes of making a profit. Different Type of Profit: Non-Profit Organization: Operate solely to serve the good of society. Money comes into the non-profit through donation, government grants, or the sale of goods. Money is then put back into the cause which started the organization. (Red Cross) You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.