What is an economy?

Everyone!

​Who is involved?

the way goods and services are produced and consumed

Definition

something that can be used or consumed

Goods

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intangible products or actions that are produced and consumed at the same time

Services

Have you ever bought anything or paid someone to do something for you?

Then you are a consumer!

Have you every worked as a babysitter or sold chips at school?

Then you are a producer!

Consumers, producers, and the market

Producers are people who make goods or offer services to others.

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In a market economy, producers are free to decide what to produce and consumers are free to buy whatever they need and want.

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Guess who has a market economy? Yes.... your country. ​

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A profit is the money you gain after selling something for more money than it cost to make it.​

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Incentive is the motivation to do something. (this is your why)

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Producers have incentive to produce items that bring in profits.​

the limited amount of resources available

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EX: toilet paper during the pandemic​

scarcity

the benefit you give up by choosing to do one thing instead of another

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EX: choosing candy over glow sticks ​

​Opportunity cost

scarcity and opportunity cost

Imagine your class is deciding whether to sell candy or glow sticks for a fundraiser. Which will make more money?

Command economy

the opposite of a market economy

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• the government decides what will be produced, how much will be produced, and how much goods and services will cost​

​Traditional economy

found in primitive cultures

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​focused on providing food; people follow methods and traditions their ancestors have always used