What is an Economy?

Chapter 13What is an Economy?

13.1 Why Societies Have Economies?
Factors of Production
Labor is the time, energy, and skills of workers.
Land is resources such as water, minerals, and timber.
Capital is anything such as tools, machines, or buildings used to produce goods or services.
System of Distribution
Through a system of distribution, the people who want goods and services receive them.
Consumption is The act of buying or using goods and services.
Through a chain of activities, people constantly make choices about what they want and how to spend the money they have to satisfy their wants.
The Want-Satisfaction Chain
Opportunity Cost
Each economic decision results in an opportunity cost.
Scarcity is a problem because in every society, wants are greater than resources.
In every economy, businesses, governments, and individuals make choices about how to use limited resources to satisfy unlimited wants.

13.2 Basic Economic Decisions

13.3 Three Types of Economies
Tradition Economy
Command Economy
Market Economy
What are some ways that the market system rewards success and punishes failure?
Do you agree, disagree, or partly agree or disagree with the statement?

Draw ComparisonsCreate 3 drawings or cartoons to compare how one specific decision would be made under each of the three types of economies. Use captions.