The Concept of Economy

Standard 8:  Explain the concept of economy, delineating between micro and macroeconomic principles, and discuss how scarcity and factors of production require nations to make economic choices.  Compare and contrast how the various economic systems (traditional, market, command, mixed)  try to answer the questions:"What to produce? How to produce it? For whom to produce?"

Opening

What do you think is the coolest mascot for a team?  Why?


Look at the picture of the bull on page 58.
Now look at DECA students in front of that same bull in the financial district of NYC.

If we are talking about our economy, why would a bull be presented in the financial district?

This goes back to our economy and hopes for our nation.  If our economy is strong, who benefits?



Let's look at what creates an economy:  Read pages 61-62 to gather some initial information.

What's an economy?  

An economy, or economic system, is the organized way a nation provides for the needs and wants of its people.  Countries with different economic systems have different approaches when making choices.  From their resources available, they must determine how to provide for their own population... through manufacturing, buying, selling, transporting, and investing.

Micro vs. Macro

Micro View

Macro view

Macro View

Micro View

Macro

Micro

Now that you understand the concept of macro vs. micro as a prefix, try to think what how you would explain the concepts of macro-economics vs. micro economics...

Microeconomics vs. Macroeconomics:  See the short video below to understand the difference between the two perspectives.

What are economic resources?

Economic resources (factors of production) are all the things used in producing goods and services.  These factors of production include land (natural resources), labor (people who work), capital (goods used in the production process), and entrepreneurship (skills of people willing to invest time and money to run a company).

Scarcity

Scarcity is the difference between wants and needs and the available resources.  Think of something that is very valuable.  Take diamonds for example.  Diamonds are very expensive because they are rare.  There are not enough diamonds for everyone to have all they want (or need).  They are scarce.

Now, think about a source that is seemingly unlimited, like air.  Do we have all the air we need?  Air is not as scarce as diamonds are.  See the difference?

Now use the concept of scarcity to economic resources.  Different economies have different amounts of economic resources.  The U.S. has an abundance of entrepreneurs, and many natural resources, but it still cannot meet the needs and wants of all its citizens.  Similar concepts are the same for all nations in different degrees.

 

Types of Economic Systems

Nations must answer these three basic economic questions about how best to use limited economic resources to get the goods and services the country needs.
1.  What goods and services should be produced?
2.  How should the goods and services be produced?
3.  For whom should the goods and services be produced and distributed?

What do you think?

Preventing Green Fatigue - page 66 in textbook
Tired of ads about eco-friendly products?  You may be suffering from green fatigue - confusion and skepticism caused by marketing claims about products' green benefits.  Some of these claims are true.  Others are examples of "greenwashing," or making a product sound more environmentally friendly than it is.  In response to the rising tide of greenwashing, the Federal Trade Commission has developed rules about environmental claims.  All claims, whether specific or implied (suggested), must be backed by scientific evidence.

On the worksheet labeled Preventing Green Fatigue...
1.  select one of the products listed on the front and complete the front side of the worksheet.
2.  Identify the (green) scientific evidence the company offers (on the package or its website), to support the claim.  List evidence on the back of the worksheet.  Explain in one paragraph whether you think the claim is valid.  Be prepared to share your findings in class.