Economics

Economicsthe
study of the
production,
distribution,
consumption and
exchange of goods
and services.
Economic Geography
Economic Geography how
people use Earths resources, how
they earn a living and how goods
are distributed
- material objects that
people want to pay for,
such as the newest CD.

Goods
- activities that
people do for others
for a fee.

Services
Economic Activity
Primary Activities directly use
(harvest/extract) natural resources and
raw materials (agriculture, forestry,
mining)
Economic Activity (Cont.)
Secondary Industries primary industry
materials finished goods useful to
consumers (manufacturing)

Economic Activity (Cont.)
Tertiary Industries service industries
services to primary and secondary
industries (stores, restaurants, banking,
insurance , transportation)

Economic Activity (Cont.)
Quaternary Industries service
providers w/ specialized skill or knowledge
to help P, S, T Industries (information
research/management)

Indicators
Gross National Product (GNP) total value
of *final* goods and services produced by a
nation in a year regardless of location
(goods/services of a certain national origin)

Gross Domestic Product (GDP) - total value
of goods and services produced within a country
in a year (regardless of country of origin)

HQ
S S
S
S
S
S
S
S
S
S
S
S
HQ
S
S
Per-Capita Income the average amount of
money earned by each person in a country

Literacy Rate percentage of people able to
read and write at a specified age

Infrastructure basic support systems needed
to keep an economy going (power,
communications, transportation, water,
sanitation, education systems)

Indicators

Poverty-Rate the percentage of the
population below poverty level (determined by
govt) (p. 54)
http://www.census.gov/prod/2008pubs/p60-235.pdf


Health Insurance Coverage
Number/percentage of people covered by
health insurance (p. 74)
http://www.census.gov/prod/2008pubs/p60-235.pdf

Indicators (cont.)
Developed vs. Developing Countries
Developed Countries European nations, US, Canada, Japan,
Australia, Singapore
Characteristics:
Good education
Health care
Manufacturing & service industries
Involved in international trade

Developing Countries African nations, S./C. American
nations, SE Asian nations
Characteristics:
Low literacy rates
Limited health services
Subsistence farming limited industry
High poverty/unemployment rates

**In between Mexico, Brazil, Argentina, Hungary, South Korea
How can a developing country
improve its economy?
Harness natural resources: oil, minerals,
valuable crops
Without such natural resources future is bleak
Receive foreign aid ease suffering/create
dependency
Fair Trade Agreements with Multinational companies
build factories in developing countries
Industry/jobs to developing country
Inexpensive raw materials and labor low cost
Harmful effects on local culture/economy/environment


Economy Types

Market Economy Free Enterprise, Free Market
- Consumers (people) demand and choice determine
what and how much will be produced
- Private ownership of property and industry is encouraged.
- Risk-taking is incentivized with the reward of profit (wealth).
- Competition between consumers and producers indirectly
regulate the market (prices, wages, quality, quantities)
- Creates an unequal distribution of wealth (wealthy minority,
small middle class and large class of working poor)
- Role of government is limited (protecting property,
distributing risk), but essential.
- Capitalism is an example of this.
Command/Planned Economy
- Central government has near complete control over
all economic decisions such as what and how much is made,
how much things will cost, how much workers get paid, etc.
- Government owns most forms of major production
(making things).
- Extensive private ownership and profit at the individual level
is discouraged or regulated by the central government
collective/public/government ownership is encouraged
- Government regulates toward a more equal distribution of
wealth, stable employment, inventory levels, etc.
- Command economies are more stable and less susceptible to
market-driven fluctuations (up/down).
- Communism is one example of this.

Mixed Market Economy
- Combination of Command and Market Economies
- The economy attempts to function for the benefit of all
people (wealthy & poor)
- Government attempts ensure a large middle class of people
(discouraging large wealth gaps between rich and poor) by
encouraging the availability of basic medical care, public
education, unemployment insurance, retirement/elderly care
family services, etc. AND discouraging
- Government owns/controls/regulates core/basic industries
(such as healthcare, transportation, communication, banking,
coal mining, and steel production)
- Private companies own all other forms of production.
- Social Democracy is an example of this.

Capitalism
An economic system in which the means
of production and distribution are
privately or corporately owned and the
money made by a person or corporation is
reinvested (put back into the economy) so
the economy can continue to grow.
Communism
An economic system where everyone owns
everything, but it is controlled by the
central government.
Socialism
An economic system in which the means of
producing and distributing goods is owned
by a centralized government that often
plans and controls the economy. The
government often owns the major forms
of production.
What is a traditional economy?
A traditional economy is an economic system in
which answers to questions like Who? How? What?
and For whom?
are all made on the basis of customs, beliefs, religion,
habit, etc.
Wantsphysical and psychological
desire for goods and services.
Scarcitylimited quantities of
resources that are never enough to
satisfy human wants.
(Scarcity tends to raise price.)
Opportunity Costpurchasing
one thing which costs you the
opportunity to purchase
something else.
Demand - consumer willingness
and/or ability to buy something
(not desire or want)

Supply- amount of products
sellers will sell


Law of Demand - the higher the
price, the lower the demand - - and
the lower the price, the higher the
demand.
# of Units
Demanded
$
Consumers want to pay as little
as they can. They will buy more
as the price drops.
***
Sellers, on the other hand,
want to be able to charge as
much as they can.
Law of Supply - if the price of something
increases, the number of units supplied
increases; if the price of something decreases,
the number of units supplied decreases.
Sellers will be willing to make more and sell
more as the price goes up.
# of Units
Supplied
$
At a price
of
Consumer will
buy
.70 cents 100 cookies
.60 200
.50 400
.40 700
.30 1,100
.20 1,600
.10 2,300
Demand Schedule
for Cookies
Supply Schedule
for Cookies

At a price
of
Sellers will
offer
.70 cents 2,000 cookies
.60 1,800
.50 1,600
.40 1,400
.30 1,100
.20 700
.10 100

Less Developed Country
More Developed Country
POPULATION
DISTRIBUTION
Stages of Population Growth
Stage One birthrate and death rate are high, but equal
many births but many deaths (infant mortality rate is
high, disease, people dont live as long)
growth is low
Stage Two birthrate remains high, death rate declines
slightly (better water, healthcare, more children survive
into adulthood (infant mortality rate drops)
growth is rapid
Stage Three birthrate drops, most children live to
adulthood, people decide to have fewer children, birth
and death rate are about the same
growth is low/population is high
Continent Population
(in millions)
2000
% of World
Population
Wealth
(GNP in billions of
US$)
% of World
GNP
Africa 794 13.1% $ 495.4 1.8%
Asia 3,672 60.6% $ 7,172.6 25.5%
Oceania 31 0.5% $ 442.4 1.6%
Europe 727 12.0% $ 9,606.3 34.2%
N. America 314 5.2% $ 8,933.6 31.8%
S. America 519 8.6% $ 1,430.7 5.1%
World Total
6,057 100.0% $ 28,081.0 100.0%
World Population Wealth by Continent