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ECONOMICS

ECONOMICS. Unit 2 . The way a country manages its money and resources to produce, buy, and sell goods and services. Command Economy. Definition: prices are controlled by the government The government controls the supply of a product (how much is made and how much it costs)

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ECONOMICS

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  1. ECONOMICS Unit 2 The way a country manages its money and resources to produce, buy, and sell goods and services

  2. Command Economy • Definition: prices are controlled by the government • The government controls the supply of a product (how much is made and how much it costs) • Ex: the Soviet Union and Communist countries • BRAINSTORM: why might command economies fail?

  3. Market Economy • Definition: prices and goods are controlled by the Supply and Demand • Companies decide how much of a product (iphone) to make based on how many people want it (aka demand) • Companies also set the prices for the products they produce • Ex: many countries work toward this economy • BRAINSTORM: why might a market economy be a good thing?

  4. Mixed Economy • Definition: both the government and companies work together • They decide prices • They both decide what products to produce based on demand • Example: The United States, Great Britain, etc. • Brainstorm: Is this economic system always successful?

  5. The Law of Supply and Demand • Definition: the understanding that the supply of an item effects the demand. - If the supply is LARGE then the demand will be small. - If the supply is small then the demand will be LARGE

  6. Examples: 1. Air Jordan’s are being sold for 100 dollars for a pair of shoes. They are very popular and the store is always selling out. - Supply: up or down? Demand up or down? • What should the producer do to the price? Raise or lower 2. The Iphone 5 is replaced by a newer, better version, the Iphone 5BILLION. Apple suddenly can’t sell any Iphone 5’s. Supply is: up or down? Demand is: up or down? • What should Apple do to the price to sell more?

  7. 3. Write your own example showing supply and demand. -Solve your example

  8. https://americanheritage.byu.edu/pages/gamesandactivities/supply-and-demand-interactive-chart.aspxhttps://americanheritage.byu.edu/pages/gamesandactivities/supply-and-demand-interactive-chart.aspx • http://www.youtube.com/watch?v=Ng3XHPdexNM

  9. Circular Flow Notes • Households: • Provide businesses with labor and pay for goods and services • Provide government with labor and taxes • Businesses: (producers) • Pay households income and with goods and services • Pay governments taxes and goods and services • Governments: • gives businesses payment for goods and services • provides households with income and goods and services

  10. Types of taxation • Progressive Tax: people who make more money are taxed more • Regressive Tax: people who make less are taxed more • Proportional Tax: people pay the same no matter how much they make

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