Economics Boot Camp

By Ms. Chastain

Explain the role of business in society

To create goods and services for consumers

Profits are (hopefully) earned that then circulate money throughout the economy.

Distinguish between economic goods & services

Goods – tangible (you can touch it)› Ex. Car, cell phone, pencil

Services – intangible (you can’t touch it)› Ex. Haircut, Car Wash, Yard Work

Explain the concept of economic resources

Land: natural resources› Ex. Trees, lakes, coal

Labor: HUMANS working› Ex. Cashier, Teacher

Capital: tools, machinery, robots, etc.› Ex. Cash register, lawn mower,

computer Entrepreneurship: owning a business

› Ex. Truett Cathy (owner of Chic-fil-A)

Describe the concepts of economic scarcity and economic activities

Scarcity – lack of resources (or not enough stuff)› Fundamental problem of economics

Must be able to distribute scarce resources using different methods› Rationing/Coupons› Money

Explain the principles of Supply and Demand

Demand – what consumers are willing to purchase at all available prices› Law of Demand – if the price increases, quantity

demanded decreases, and vice versa

Explain the principles of Supply and Demand cont.

Supply – what producers are willing to sell at all available prices› Law of Supply: if prices increase, quantity

supplied increases, and vice versa

Explain the types of economic systems

Traditional economic system: based on customs, rituals, and habits› Usually run by an elder, chief, or medicine

man› Jobs are handed down from family members› Do not like change – severe punishment for

change› Ex. Amish, Alaskan/Canadian Inuits,

Australian Aborigines

Explain the types of economic systems cont.

Command Economic System: controlled by a central authority› Usually communist or socialist› Run by a dictator, authoritarian

government, or totalitarianism› Jobs are chosen by the government

system› Ex. Cuba, North Korea

Explain the types of economic systems cont.

Market Economic System: people are allowed to control the system› Usually a democracy style government system

› May be led by a President or central government group but they are chosen by the people

› Ex. United States, England, Japan

Determine the relationship between government and business

Free Enterprise System: businesses are allowed to run freely without much (or any) government control

Modified Free Enterprise System: businesses have a lot of freedom but the government regulates prices, goods sold, services provided, etc.

Explain the concept of private enterprise

Private Enterprise: Able to own a businesses without much interference from government›Usually able to sell whatever you wish, hire whomever you want, etc.

Identify factors affecting a business’ profit

Consumer Sovereignty: consumers choose all prices, what is sold, how much is sold etc.

Market Failures: a breakdown in the market causing a business to possibly fail› Negative/Positive Externalities: not

involved in the situation but affected anyways Ex. An airport expands = creates new jobs (positive), pollution/traffic/noise (negative)

Determine factors affecting business risk

Can be hard to get loans Hard to find reliable business

partners Hard to find reliable employees Location Competition Hard to actually earn a profit

› Inputs may be too expensive

Explain the concept of competition

Two or more businesses competing for customers, sales, profit, etc.

Explain the concept of productivity

Want to use the least amount of inputs to create the most amount of outputs› Ex. Lemonade Stand

Cheap lemons, sugar, water = Inputs

Sell a lot of lemonade for as high a price possible = Outputs

Explain the concept of productivity cont.

Division of Labor: one of the best ways to achieve productivity› Divide up jobs so workers perform fewer tasks

› Ford created the assembly line for this purpose