Economics

• Scarcity

  We as humans have unlimited wants but unfortunately we have limited resources. This is the problem of scarcity. Scarcity makes all economic systems make choices.
• The goal of any economic system is to solve the problem of scarcity
• Supply


  How much of a product is available
• Demand


  How much people want the product
• When the supply of a product is low


  Demand makes the price higher
• When the supply of a product is greater


  The price is lower
• Products or situations that are super expensive/cheap because of supply & demand problems


  • (to be provided by students)
• Supply and Demand Graphing


  • X = quantity
  • Y = price
• Mercantilism


  Historical economic system dominant leading up to WW1
• Mercantilism


  • Goal: to acquire wealth from colonies maximizing exports and minimizing imports
  • Promotes: Monarchy, imperialism & colonialism
  • Problems: trade and quality of life diminishes
• The Mercantile System
• Cost Benefit of Mercantilism


  • Suppresses individual freedoms
  • Wealth is measured physically ($$ gold)
  • Focuses on selling exports
  • Needed to maintain large populations
• Capitalism


  Market economy
• The Wealth of Nations published

  1776
• Capitalism


  • Wealth of a nation isn't measured by the amount of gold you have or the size of the military
  • Wealth is measured by the quality of life and productivity of the people
• Quality of Life


  • Healthcare (healthy)
  • Education
  • Basic necessities (water, shelter, food)
  • Freedom of speech (democracy)
  • Space – clean natural environment, public protection
  • Safe – free from conflict
  • Transportation
  • peace
  • Infrastructure – roads, electricity
  • Leisure activities
• Productivity


  Capitalism - Government is not involved in the economies, the productivity of the people in the nation will increase
• Laissez faire


  Free market
• Invisible hand


  How people will know what to produce
• Capitalism


  • Based in greed or self interest and competition
• Capitalism example


  • Shoemaker
• Market Economy


  • Emphasis on: Individual freedom, Profit as the goal of business, Self interest, Competition is essential and desirable, The economy is not planned and is decentralized
• Planned Economy


  Emphasis on collectivism and group control, cooperation, equality. Economy is planned from the top down = centralized
• Planned Economy


  • The Government controls production limits and prices
  • Government policies are put in place to execute economic plans
  • Most economic plans are created by the Government, except for a few sectors
  • Effective and equal economic stability is the objective
  • Central authority distributes the resources at its own will
• Key idea of Planned Economy

  The government looks at demand and controls supply
• Donut Economics


  The Doughnut consists of two concentric rings: a social foundation, to ensure that no one is left falling short on life's essentials; and an ecological ceiling, to ensure that humanity does not collectively overshoot the planetary boundaries that protect Earth's life-supporting systems