How does a traditional economy answer the three economic questions?

1. Chapter 2 Section 1 – Daily Assignment Questions pgs. 26 -27 How does a traditional economy answer the three economic questions? Describe traditional economies and their communities. What is a disadvantage to a traditional economy? How are the three economic questions answered in a market economy? What are other names for market economies? How are the three economic questions answered in a command economy? Why are they referred to as command economies? Why are most modern economies referred to as mixed economies?

2. Daily Assignment – Economic Systems – pgs. 23-27 • Define economic system. • List the Three Key Economic Questions. • List the four types of economic systems. • Using the Chart Below, describe each of the Economic Goals and Societal Values. Then provide a real-life example of each.

3. Bead Game Simulation

4. Reflection Questions • Which system had the most incentive to work? Why? • Which system had the least incentive to work? Why? • Which system was the most inefficient by modern standards? Explain. • Which system would you like to live in, why?

5. Morning Tutoring Sessions

6. Standards Mastery Sheet

7. Economic System • Economic System – method used by society to allocate the scarce resources, in order to produce goods and services

8. Three Economic Questions • What goods and services should be produced? • How should these goods and services be produced? • For Whom to produce them for?

9. Four Economic Systems • Traditional economy – relies on habit, custom, or ritual to decided the 3 economic questions • Market economy – economic decisions are made by individuals (households and firms) and are based on free exchange and free trade. • Command Economies – in a centrally planned economy, the central government alone decides how to answer the three economic questions. • Mixed Economies – most modern economies are mixed economies, market-based economic systems in which government plays a limited role.

10. Daily Assignment Chapter 2 Section 1 – pgs. 23-27 • Bead Game Simulation

12. Economic Efficiency Economic efficiency - Making the most of scarce resources, using your resources wisely

13. Economic Freedom Economic Freedom - Freedom from government intervention in the market, relative to the production and distribution of goods/services

14. Economic Security Economic Security - government will provide a safety net in times of economic downturns

15. Economic Predictability Economic Predictability - knowing that goods and services will be consistently available for consumption

16. Economic Equity Economic Equity - Fairness, being paid according to your skill level, not being discriminated against

17. Economic Growth Economic Growth – improving the economy from year to year, improving standard of living as measured by GDP.

18. Economic Innovation Economic innovation – improving upon existing technology in order to improve efficiency.

19. Additional Goals Additional Goals – future goals for a society, environmental protection, full employment, universal medical care, etc.

20. Economic Goals and Societal Values Poster Project – pgs. 26-27 • Poster Requirements: • Title - Economic Goals and Societal Values • Summary Statement – “The Economic Goals and Societal Values provide a basic framework for each society and their attempts to provide for their people.” • Pictures of each goal represent each of the economic and social goals. • 1 if working alone • 2 if working with a partner • 3 if working with a group of 3 • Label, describe and summarize each picture • Economic Efficiency • Economic Freedom • Economic Security • Economic Predictability • Economic Equity • Economic Growth • Economic Innovation • Additional Goals Economic Efficiency Picture Summary: This picture represents assembly line production at an automobile manufacturing plant. This shows how the division of labor and specialization can increase efficiency.

21. Economic Goals and Societal Values Economics Goals and Societal Values Poster Project pg. 23 - 27 Summary Statement: The Economic Goals and Societal Values provide a basicframework for each society and their attempts to provide for their people. Economic Predictability Economic Security Economic Efficiency Definition: societies try to maximize the factors of production Picture:This picture represents an efficient use of resources through assembly line production Economic Innovation Economic Growth Additional Goals Economic Freedom Economic Equity • Poster Requirements: • Title - Economic Goals and Societal Values • Summary Statement – Purpose of economic and Societal Values • At least 8 pictures to represent each of the Economic Goals and Social Values • Label, definition and picture description for each of the 8 Economic Goals and Societal Values

22. Review Economic Goals 1. Economic Freedom 2. Economic Security 3. Economic Innovation (Efficiency) 4. Economic Efficiency (Innovation) 5. Economic Growth (Innovation) 6. Economic Predictability 7. Additional (Future) Goals (Equity) 8. Economic Equity (Growth)

23. Chapter 2 Section 2 • Imagine that you are walking into Walmart. List 3 items that you could purchase and the departments that you would find them in.

24. Section 2 – The Free Market • Market – buyers and sellers meet to exchange goods and services • Market Economy – economic decisions(what to produce, how to produce, for whom to produce) are made by consumers and businesses based on exchange of goods and services • Capitalism (free market) – Individuals and businesses own the factors of production and can profit on them • Voluntary Exchange - is the act of buyers and sellers freely and willingly engaging in market transactions where both parties benefit

25. Specialization • Specialization – the separation of tasks within a system; people focus on a specific purpose/task • Division of Labor – Workers perform fewer tasks in order to operate more efficiently

26. Households and Firms • Household – Person or group of people living in a residence • Consumers - use the finished goods and services (outputs) to satisfy wants and needs • Firm – business, organization that uses factors of production (inputs) to produce a product, which it then sells • Suppliers – transform “inputs” (F.O.P.) into “outputs” (products)

27. Product Markets • Product Markets – Households and firms interact; producers sell their goods and services to consumers • Households are buyers of goods and services • Firms are sellers of goods and services (outputs)

28. Factor Markets • Factor Markets – the markets where productive resources (F.O.P)/Inputs are bought and sold • Labor - Firms (businesses) hire workers and pay them salaries • Land - Purchased/rented land • Capital - Use money from households (savings, investment, etc) to purchase capital goods

29. Team Point Totals

30. Circular Flow Model of Economic Activity – shows the flow of money and goods/services from and to businesses and households Consumer Spending Business Income/Revenue • Product Market • Market for Goods and Services • Firms sellHouseholds Buy Consumer Goods and Services Final Goods and Services Sold • Households • Buy and Consume • Goods and Services • Own and sell the F.O.P • Firms(Business) • Produce and sellGoods and Services • Hire and use F.O.P. Land, Labor, Capital - provided by household Inputs for Production (F.O.P.) • Factor MarketMarket for F.O.P • Households sell • Firms buy Income to Households/Individuals Payment for F.O.P. – Rent (Land) Wages (Labor), Interest (Capital), Profit (Entrepreneurs)

31. Application Questions • In the factor market, what do businesses provide households? • The flow of goods and services in the product market is represented by which firm and products on the model below? • When you apply for a job at the local Starbucks which market are you in? • Which color arrows represent the flow of money; what color arrows represent the flow of inputs and outputs. Income/payment the F.O.P Starbucks/Coffee Factor Blue/Tan

32. Daily Assignment - Circular Flow Model of Economic Activity Consumer Spending1. _________________________ • Business Income • _________________________ Product Market Goods Purchased 1. ______________________________ 2. _______________________________ Goods Offered1. ___________________________ 2. ___________________________ • Household • ________________________ FirmFirm 1. _____________________________ Firm 2. _____________________________ Input for Production 1. ___________________________ Factor of Production Offered1. ___________________________ Factor Market Weekly Income1. __________________ Payments for F.O.P 1. _________________

33. Daily Assignment - Circular Flow Model of Economic Activity Consumer Spending1. _________________________ • Business Income • _________________________ Product Market Goods Purchased 1. ______________________________ 2. _______________________________ Goods Offered1. ___________________________ 2. ___________________________ • Household • ________________________ FirmFirm 1. _____________________________ Firm 2. _____________________________ Input for Production 1. ___________________________ Factor of Production Offered1. ___________________________ Factor Market Weekly Income1. __________________ Payments for F.O.P 1. _________________

34. Circular Flow Model of Economic Activity Consumer Spending1. _________________________ • Business Income • _________________________ 9.49 9.49 Product Market Goods Purchased 1. ______________________________ Goods Offered1. ___________________________ 2. ___________________________ 3.___________________________ Tacos BurritosFajitas Fajitas • Household • ________________________ • ________________________ FirmFirm 1. _____________________________ Firm 2. _____________________________ Elisa Marcella Cilantros Books a Million Input for Production _________________________ _________________________ ________________________ Factor of Production Offered1. ___________________________ Stockers Coffee Sellers Cashiers Labor/Salesperson Factor Market Payments for F.O.P ________________ ________________ ________________ Weekly Income1. __________________ 200 3000- Lease 2200 – Electric 400 - Water

35. Circular Flow Model of a Mixed Economy Consumer Spending/Investing Business Income/Revenue Product Market Goods and Services Sold Taxes Goods and Services Purchased: Taxes Households Expenditures Expenditures • Firms Land, Labor, Capital, Entrepreneur Inputs for Production (F.O.P.) Taxes Taxes Factor Market Income to Households/Individuals Payment for F.O.P. – Wages, rent, capital goods

36. Vince Lombardi “What it Takes To Be Number 1” "Winning is not a sometime thing; it's an all the time thing. You don't win once in a while; you don't do things right once in a while; you do them right all the time. Winning is a habit. Unfortunately, so is losing. There is no room for second place. There is only one place in my game, and that's first place. I have finished second twice in my time at Green Bay, and I don't ever want to finish second again. There is a second place bowl game, but it is a game for losers played by losers. It is and always has been an American zeal to be first in anything we do, and to win, and to win, and to win. Every time a football player goes to play his trade he's got to play from the ground up-from the soles of his feet right up to his head. Every inch of him has to play. Some guys play with their heads. That's O.K.You've got to be smart to be number one in any business. But more importantly, you've got to play with your heart, with every fiber of your body. If you're lucky enough to find a guy with a lot of head and a lot of heart, he's never going to come off the field second.

37. Vince Lombardi “What it Takes To Be Number 1” • Running a football team is no different than running any other kind of organization-an army, a political party or a business. The principles are the same. The object is to win-to beat the other guy. Maybe that sounds hard or cruel. I don't think it is. It is a reality of life that men are competitive and the most competitive games draw the most competitive men. That's why they are there-to compete. To know the rules and objectives when they get in the game. The object is to win fairly, squarely, by the rules-but to win. And in truth, I've never known a man worth his salt who in the long run, deep down in his heart, didn't appreciate the grind, the discipline. There is something in good men that really yearns for discipline and the harsh reality of head to head combat. I don't say these things because I believe in the "brute" nature of man or that men must be brutalized to be combative. I believe in God, and I believe in human decency. But I firmly believe that any man's finest hour, the greatest fulfillment of all that he holds dear, is that moment when he has worked his heart out in a good cause and lies exhausted on the field of battle - victorious." • ...Vince Lombardi

38. Do you agree with Vincent Lombardi’s assertion that people are born with the desire to compete why or why not? What areas do you see competition in the economy of the United States ? How is competition beneficial to our economy/society? How is it harmful to our economy/society? Competition Article

39. Competition • Competition – efforts among sellers/producers to attract consumers at various prices • At the heart of market economic philosophy • Incentive – an expectation that encourages people to behave in a certain way (positive and negative) • Businesses respond to profits • Consumers respond to price change (high/low)

40. Chapter 2 Section 2 – Daily Assignment Economic Profile Adam Smith pgs. 33 What was Adam Smith’s ethnic and professional background? What was the name of the book that he published; when was it published? What did Smith identify in the book? What did he assert about specialization and division of labor? What did he believe about the role of government in the economy? Define the French term Laissez Faire; why did Smith believe in Laissez-Faire economics? What is meant by his metaphor of the Invisible Hand? How do both consumers and businesses benefit from this philosophy? • Scottish, Philosopher, Professor • Wealth of Nations • Land, labor and capital as the factors of production that generate wealth • Productivity increases through specialization • Government must leave individuals as free as possible to pursue their interests • Individuals try to pursue their own self-interest will benefit all of society • Let them do as they please • Consumers buy what they want, producers supply for profit

41. Centrally Planned Economies • Command – central authority owns and operates the Factors of Production • Centrally Planned Economy – central government answers the three economic questions; WHAT to produce, HOW to produce, and FOR WHOM to produce • Oppose private property, free market pricing, economic freedom

42. Socialism and Communism • Karl Marx – German social philosopher that studied economic systems in Europe • Communist Manifesto – written by Marx and Frederick Engels became basis for modern-day command economies • Thought capitalism would fail because it put too much wealth in the hands of few and left everyone else poor • Believed in a “no-class” system, where all share in wealth/power • Socialism – distribution of wealth and F.O.P. equally amongst society • Communism – political and economic system with centralized economic decision-making • Authoritarian Government – exact strict obedience from their citizens; do not allow individual freedom

43. Chapter 2 Section 3 – Daily Assignment Questions “The Former Soviet Union” pgs. 36-38 How did the Soviet Union arise? Where did Soviet planners allocate the factors of production? How did the Soviet Union control agriculture? What three industries did Soviet Planners favor? How did the Soviet Union view entrepreneurial endeavors? What was the quote used by Soviet consumers as a joke? Why were Soviet Consumers’ left unsatisfied? Page 39 – Russia in Crisis How did many Russians initially respond to the Communist collapse? What happened over the next decade? How did Russia deal with corruption? What were some characteristics of Russia’s financial problems? What evidence can be seen that success is in sight?

44. Do Now Ch 2 Section 3 • Scenario 1 You have two cows. You trade one to your neighbour for a bull. You only produce what you need to survive. • Scenario 2 You have two cows. The State takes both and gives you just enough milk to live • Scenario 3 You have two cows. You sell one and buy a bull. Your herd multiplies, and your wealth grows. You sell your herd and retire on the income. • What economic system matches each scenario? • Which scenario do you think is the most ideal and why? • Which scenario do you think sounds the most like the United States? Why? • What countries do you know of that could fall into scenario 2.

45. Whatever is necessary for the tribe to survive. Whatever the government tells them to produce. Whatever is in demand by the consumers. The most efficient method possible; technological innovations. Based on tradition, habit and custom; the way its always been done. Based on the government. Consumers that are willing to purchase. Whoever the government tells them to produce it for. The tribe

46. Daily Assignment – Comparing Economic Systems Central African Mbuti North Korea United States Canada Japan South Korea Singapore Germany France Great Britain Western Europe Australian Aborigines Cuba Inuits of Canada China Examples Former Soviet Union Everyone knows their role in society/economy Change economic direction in a short time Adjust to change over time Individual economic freedom Limited government interference Decision-making is decentralized Variety of goods and services High degree of consumer satisfaction Advantages Health and public services are available at little or no cost (regardless of income) Economic questions are answered based on tradition Does not provide basic needs for everyone Lack of public goods by private markets High degree of uncertainty, job loss, competition Market failures (monopoly) Not designed to meet wants of consumers Discourages new ideas Does not give incentive to work hard Disadvantages Large decision-making bureaucracy Lack of progress, lower standard of living Lack of economic flexibility Lack of economic freedom, profit motive

47. What traditions are mentioned regarding American society? • List some additional traditions that you have in your family. • How did the Inuit exemplify a traditional economic system? • How did the State Planning Commission determine the direction of the Soviet economy? • What shortcut did Soviet workers take in order to fill their quotas; what did it lead to? • How did the State Planning Commission respond to a shortage of male workers? • Describe what a “dollar vote” indicates. • Describe how the market adjusted from the 1970s gas shortage, to the 1980s. • What examples are provided of the various goods and services provided in a market economy? • How do both the majority and minority end up satisfied in a market economy? • What are the three conditions that must be met to ensure that market economies do not fail? • Thanksgiving, bouquet toss, shaking hands • Open one present on Christmas Eve • Share the spoils of the hunt • Determined the needs based on governmental decisions • Made their products heavier • Made the women go to work • Spending money to show firms what to produce • People bought less gas-guzzling cars and bought more fuel-efficient ones • Internet, electric dog collars, Cable TV • Both can get what they want • Competition, Flexibility, Access to information

48. Modern Economies • Free Enterprise – competition in the marketplace is allowed to flourish with no interference from government • Modified Free Enterprise (mixed economy) – businesses are free to compete with some government regulation/intervention Centrally Planned Free Market Mexico France South Africa Poland Japan • United Kingdom Hong Kong • Canada Singapore • United States Iran China North Korea Cuba

49. Laissez Faire in a Modern Economy • Laissez Faire – no government intervention in the economy • Some government intervention is necessary in the economy; some needs are difficult to answer in the marketplace • National defense, roads and highways, education, etc… • Government acts a protector, regulator and overseer of economy

50. Government Money • Taxes from both households and businesses • Income tax, state income tax, social security, Medicare/Medicaid, unemployment insurance, etc.