consumers - those who use products and services

producers - those who create products and services

economic system - the way a society organizes the production, distribution and consumption of goods and services

In our economy we need to decide what is best for us or the….

Economy - the resources and processes involved in the production, distribution and consumption of goods and services

public good - what is best for society as a whole

How much can we produce distribute and consume so that the economy can prosper?  For now, we will start off with the four types of economies:

• Tradition

• Command/Planned

• Market 

• Mixed

Traditional Economy - a system that relies on customs, history, and time-honored believes.

Examples:

In Canada, the Inuit continue to use a traditional economy. In order to survive the harsh climates of northern Canada, traditional survival skills are taught. Children are taught how to fish, hunt, and make effective tools. These goods are then shared within the community. 

In a planned/command economy a central authority (a government) creates a central economic plan:

1. Resources are publicly owned

2. Gov’t makes decisions on how to use the resources

3. Individual consumers have little influence on economic decision making

Examples:  Absolute monarch, dictators

Countries:  North Korea and Cuba

In a market economy the collective economic decisions of the individual buyers and sellers shape the economy of the whole society.

• Resources are privately owned

• Individual consumers make decision on how to use the resources

• The gov’t does not get involved

Examples: China, Hong Kong

Publicly Owned - the part of the economy owned and controlled by government and paid for by taxes

ex)  Provost Library and Provost Hospital

Privately Owned - in economics, the part of the economy owned and controlled by businesses and individuals

ex) Halls Foods and Western Rentals

In a mixed economy the collective economic decisions are established by both private ownership and government

• Resources are privately owned and gov’t controlled 

• Some resources are publicly owned and some are privately owned

• Both individuals and gov’t make decisions about what to produce

• Individual consumers and gov’t influence economic decision. 

Examples: Canada and US

Why does society have to create economies???

• Societies cannot have everything they want

• Resources are limited….except air

• Resources must be shared amongst those in the society

• Individual consumers drive economic decisions by choosing what they want to buy

For resources to be shared, there must be some form of organization

An economic system’s position on the continuum is dynamic, meaning it can move in either direction depending:

• Societal values

• Governmental values

The positions of Canada and the U.S. on the continuum reflect a traditional perspective on differences between their economies. Their actual positions on the continuum shift right and left, depending on the political party in power.

A few more definitions

NOTE: these definitions can be recorded below the previous paragraph on your handout.

Consumers - those who use products and services

Producers - those who create products and services

Supply - the products and services created by producers 

Demand - the wants and needs of consumers for products and services

shift left - a shift on the economic continuum towards more government involvement in the economy.  This is usually described as taking a more liberal position

shift right - a shift on the economic continuum towards less government involvement in the economy.  This is usually described as taking a more conservative position.

Resources must be shared among the people of the society, therefore the basic rule of economics is:

Forces us to ask 3 economic questions

• What will we produce?

• How will we produce it?

• Who will get what is produced?

Scarcity - the idea that land (materials), labour and capital (money) limit the supply of what people want and need

The method used by a society to answer these economic questions is its economic system.

Resources - anything that can be used to create goods and services

There are 3 basic kinds of resources:

• Land

• Labour

• Capital 

Land includes:

• Natural resources found in and on the land

  • forests and mineral deposits

• The value depends on their usefulness and their scarcity.

  • gold is a precious metal only because it is hard to find, and is very useful 

  • sand is also very useful but is also easy to find, therefore it has a lower value 

It consists of both non-renewable and renewable resources.

Labour consists of: 

• the human effort that goes into producing a good or a service

  • includes physical efforts

  • mental efforts

Capital includes:

• Money used to produce goods and services

• Money needed to pay for labour 

• Money needed to buy and maintain equipment used in the production of goods

• Capital is created through the accumulation of wealth.

input - what is put in, taken in, or operated on by any process or system.

output - the amount of something produced by a person, machine, or industry.

Crown corporation - a company that is owned by the government

Governments create crown corporations for 3 reasons:

• To provide essential services

• To promote economic development

• To support Canadian culture and identity

Examples:

• Marine Atlantic Inc 

• VIA Rail Canada Inc 

Socialism - an economic system where the means of production, distribution, and exchange are owned or regulated by the community as a whole.

Communism - everyone shares everything equally. Resources, such as factories and land, are owned by everyone together, not by individuals. 

Mixed Economy - some industries and resources are owned and controlled by private individuals or companies, while others are owned and regulated by the government or community

Nazism (Fascism) - the government holds a lot of power over businesses and individuals, with the goal of strengthening the nation and supporting the ruler's control.

Bureaucratic - government control, centralized decision-making, and limited market influence

Traditional Capitalism - supports private ownership, competition, making profits, individual freedom, and limited government intervention.

Remember Supply and Demand?

• Supply - the products and services created by producers 

• Demand - the wants and needs of consumers for products and services

Connect through a cause-and-effect relationship that is related to the price

Affect quality of life because they affect the prices of products we buy, the availability of products, and jobs connected to creating products.

What is the goal of suppliers???

In order to pick the economy that is best for a country, you need to ask:

What’s the best way to achieve the public good???

How we choose to answer this question is mostly based on our worldview?

Assignment:

Read page 206 and 208 and respond to the following questions:

1. How do the founding principles of Canada and the U.S. answer the question of the public good differently?

2. How have Canada and the U.S. answered the question differently at different points in their histories? Why?

What is the goal of suppliers?

To supply enough of a producet that allows for the consumer to want to buy, in order for the suppliers to make a profit. 

Competition

Why should the government still be involved in economies?

In a market economy, decisions are left up to the consumers and producers.  What might be a drawback of this?

The government gets involved in order to protect consumers while ensuring good practices.  Someone has to set some boundaries otherwise we may not have ethical practice taking place.  Even in this mixed economy, we have people that are not working in an ethical manner.

On your Chapter 6 Questions in Workspace, respond to the following questions:

1. Think critically: Why might governments want to encourage consumers and businesses to recycle?

2. How does the decision to recycle or not affect the quality of life?

3. Think critically: To what extent do you agree with the involvement of government in each of the examples?