Chapter 10

1. Chapter 10 Civics

2. People’s Many Wants • Everyone has wants: • Basic wants: • Food, clothing, shelter • Other wants: • Entertainment, education, health care, etc.

3. People’s Many Wants • Wants differ depending on where you live. • People in Hawaii want surf boards; people in Alaska want snow boards. People in Arizona spend money on air conditioning; people in Alaska spend money on heat.

4. People’s Many Wants • Wants are influenced by the society we live in.

5. People’s Many Wants • Wants also differ within societies. You may like white shoes while your friend likes black shoes. • Wants also change with time.

6. People’s Many Wants • Many wants can only be satisfied for only a short amount of time. New clothes wear out or go out of style. After eating, you will soon get hungry again. A specific video game will get boring after a while.

7. Using Resources • Factors of production – the resources people have for producing goods and services to satisfy their wants. • Everything we want or need comes from the earth and its systems. • What resources are used to make a cell phone? • The casing is made of plastic which comes from crude oil and is shaped using heat produced from coal, oil or nuclear as the primary material. • The microchip is silicon, metal and more plastic. Energy and heat used as well. • The screen is the most complex item. Being made up of chemicals such as liquid crystal, and plastic, this takes energy again to make. • Cell phones do not grow on trees, but they do come from the earth.

8. Using Resources • Three basic factors of production: • Labor – Time and energy • Land – Natural resources from the earth needed to produce something. • Capital – anything produced in an economy that is used to produce other goods and services. Examples of capital include machines, tools, buildings, and money and anything else needed to produce something.

9. Production to Consumption • To produce the goods and services people want, land, labor, and capital must be combined in a process called production.

10. Production to Consumption • Production is followed by distribution, the process by which goods and services are made available to the people who want them.

11. Production to Consumption • When goods and services have been produced and distributed, they are ready for consumption. Consumption is the act of buying or using goods and services.

12. Wants Consumption Production Distribution

13. Making Choices • There are never enough resources to produce all the goods and services people want. People in societies must make decisions about which of their wants will be satisfied. • People must balance benefits with the cost. • There are benefits and costs to having a cell phone.

14. Making Choices • Opportunity cost – the highest valued benefit given up when a choice is made. • Scarcity – the resources are limited compared to the number and variety of wants people have.

15. Three Basic Decisions • Which goods and services should be produced, and in what amounts? • How should these goods and services be produced? • Who will get the goods and services that are produced?

16. Who Gets What? • Wants are always greater than the resources available to satisfy them. Deciding who gets what resources is an important and difficult decision. • Should resources be divided up equally among the people? Should a small group of people decide who is to receive which goods or services? Should people who own more resources get more resources than those who have less?

17. Three Types of Economies • Traditional Economies • Command Economies • Market Economies

18. Traditional Economies • Traditional economy – the basic economic decisions are made according to long-established patterns of behavior that are unlikely to change. • Families are the basic unit of traditional economies. Like native American civilizations, men and women have their duties which are taught and passed down to boys and girls.

19. Traditional Economies • What to produce? – People in the tribe produce their basic needs: food, clothing, shelter. • How to Produce? – Year after year, tribe members use the same tools, weapons, and methods to produce needs. • Who Gets What Is Produced? – Tribe members share products based on effort and need. • Who Owns the Resources? – Individuals own their own resources.

20. Command Economies • Command economy – the government or central authority owns or controls the factors of production and makes the basic economic decisions. • Government usually controls almost everything including housing, transportation, banking, farms, wages, religion, and professions. Every effort is made to keep the people equal.

21. Market Economies • Market Economy – a system in which private individuals own the factors of production and are free to make their own choices about production, distribution, and consumption. • Decisions are made through bargaining in markets. The value of what have to offer sets the value of what you can get.

22. Market Economies • People are free to decide how to use land, labor, and capital. People who earn higher wages can buy more stuff. • Businesses compete for consumers. People compete for jobs.

23. Market Economy • People are motivated by profits. Profit – the difference between the total cost of production and the total revenues received from buyers.

24. Market Economy • Market economies are also known as: • Free Enterprise – a system in governments have little control over business. • Capitalism – a system in which people make their own decision about how to produce goods and provide services.

25. Modern-Day Economies • Mixed economy – an economy which combines the three basic systems. • Before 1980, China was a command economy. Today, China is one of the world’s fastest growing economies because it is allowing private business and international investment. • The United States is considered a market economy though our government controls some elements of business.