Chapter 2



Chapter 2 Economic Resources and Systems

Learning Objectives:

1. Define scarcity.

2. List the four factors of production.

3. Identify the differences between market and command economies.

4. Explain why most countries prefer a mixed economy.

What Is Economics

The study of how society chooses to use resources to produce and distribute goods and services for people’s consumption

The Economic Problem

The basic economic problem for any society is ____________.To answer this problem societies use different methods to answer the three basic economic questions.

Figure 2.1 illustrates how your choices between wants and needs influence your economic situation.

What are the 4 Factors Of Production:

1.

2.

3.

4.

Natural Resources

Natural resources become ____________.

Trees become paper. Trees ____________.

Natural resources can be either:

1 - ____________ natural resources – ____________

or 2 - ____________natural resources – ____________reproduced.

Ex:

Human Resources

Knowledge, efforts, and skills of people.

Needed for everything.

Labor –____________, physical or intellectual.

Biggest problem facing many nations today is ____________.

Capital Resources

The _________used to produce goods and services. Ex: ____________

As wants and needs change so does the need for capital resources.

Entrepreneurial Resources

The ____________goods and services or ____________.

Key in dealing with scarcity.

Basic Economic Questions:

What should be produced?

How should it be produced?

Who should share in what is produced?

Economic Systems

To use its limited resources effectively, every nation needs an economic system.

Determines how resources will be used.

Primary goal – _______________________________

Three Types of Economic Systems

1.

2.

3.

Market Economy

All economic decisions are made in the ____________according to the laws of ____________and ____________.

There are many incentives to ____________, but____________ and ____________ reap the most benefit (negative aspect of ME).

____________plays and important role.

Also called ____________

Command Economy

All economic decisions are made by ____________

Two types ____________and ____________

Primary advantage:

Disadvantage:

Mixed Economy

The ____________ takes care of people’s needs while the ____________ takes care of people’s wants.[pic]

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