The Nature of Economics
Patrick Halligan, Demitri Gamble, Numan Safsaf, Audra Scheinman
Intro to Marketing Pd:1
What is an Economy
By: Newman Safsaf
An economy, or economic system, is the organised way a nation provides needs and wants of its people. A nation chooses how to use its resources to distribute goods and services. A country's resources determine economic activities such as manufacturing, buying, selling, transporting and investing. Broad categories of resources that are common to all nations affect how business is done across the world. Economic agents can also be individuals, businesses and organizations.
By: Demitri Gamble
In an economy, there are four types of resources: Land, Labor, Capital, & Entrepreneurship.
Land: Land includes everything found on the earth or in the seas. In economics, this refers to natural resource such as coal, water, wind, and solar energy. Other resources like trees are used as raw materials in creating products and services for customers in an economy. Climate is also important. Climate affects the type of economy a country will have. For example, warm tropical countries often have an economy centered around tourism.
Labor: Labor refers to all the people who work part and full time jobs for businesses in an economy in both private and public sectors. Companies may spend lots of time and money to train their employees because well trained employees are an asset to any business. Having reliable and efficient workers can give an advantage to an economy over another economy in a different country, state, city, etc.
Capital: Capital relates to all money involved in a business or economy. This means the money used to start and operate the business. It also includes the goods used in the production. The building or factory used to run the business or operate the business and the tools for it are a big part of capital. Without capital, marketers would not have the resources to develop, advertise, or transport goods. The physical development of a country, infrastructure, is also considered capital. Roads, airports, utilities, and telecommunication is also capital. These are some of the necessary elements in production and distribution of goods and services in an economy. Running a successful business would be impossible without all of these elements.
Entrepreneurship: This is the skills of people who have what it takes and are willing to invest their time and money to run a business. Entrepreneurs organize different factors of production to produce their specific good or service. These people are the heart and soul of an economy, because they are the employers. Without them, almost nobody would have a job.
*This picture shows how valuable and scarce resources*
By: Newman Safsaf
Even the United States, with its wealth of resources, cannot meet the needs and wants of all its citizens. Many citizens live below the poverty line. Many businesses go bankrupt everyday. Nations have unlimited needs and wants for growth and development but limited resources to meet them. The difference between needs and wants and available resources is called scarcity. It forces nations to make economic choices.
Types of Economies
By: Patrick Halligan
Over time nations all over the world have been studied in the way that they answer the three basic economic questions. The way these nations answer these questions is how they are classified in the economy. They are either classified as a traditional, command, market, or mixed economy.
In a traditional economy, these responses are based off religious practices and traditions that have been passed from generation to generation. In a traditional economy, there is not much of a choice. For example, if a family lives in a specific community such as a farming community, they most likely have been farming for generations. Also a traditional economy regulates everything within the economy. It regulates who buys and sells, where buying and selling happens, and how the exchange takes place.
In market economies there is little government involvement in the economy and even none in a pure market economy. The individuals and the companies are the ones in charge and that make up the economy. In a market economy the consumers decide what is produced in the economy by their purchases that they make. Products that don't sell won't achieve success. Businesses in a market economy are very competitive in the effort to get sales. They have to sell their products at lower prices than their competitors by finding the most efficient way to produce their products. Also in this economy the people with the most money are able to buy the most goods and services. People are motivated to work so they can make money.
In a command economy the government is highly involved in the economy. They make all the decisions about what, when, and how much will be produced and distributed. In a command economy a government or a leader decides what will be produced by what they think that they need. Also the government does not just make decisions on the products, but also on the employment opportunities. The government does decide who will receive what is produced and also the wealth is spread evenly among all the people in the economy. The goal is to make everyone equal in the economy.
It is very rare to get a pure type of economy. Most economies have multiple influences of multiple economies. These types of economies are known as mixed economies. The United States is an example of a mixed economy. They have some laws made by the government that help business flow. There are also labor laws that regulate the age to work and the wages that people get paid. There are health regulations to protect our food, air, and water. All of these laws are to keep business flowing efficiently and safely. Today, types of economies are based on the amount of government interaction in the economy due to all of the economies in the world today being mixed economies.
By: Audra Scheinman
Capitalism is a political and economic philosophy characterized by marketplace competition and private ownership of businesses. It is the same as free enterprise. Capitalist societies have a government that is concerned about its people. Political systems associated with capitalism is often a democracy. An example of a capitalist country is the United States.
Communism is a social, political, and economic philosophy in which the government controls factors of production. There is no private ownership of property or capital. The goods owned in common are available to all as needed, and there are no classes in the society. The government determines the jobs that people are assigned and where they live. There is little economic freedom associated with communism. Cuba is a country classified as communist.
Most countries defined as socialist have a democracy. The main goal of socialism is to meet basic needs for all and to provide employment for many. Socialist countries usually have more social services to maintain a standard of living for everyone. Businesses and individuals pay higher taxes than capitalist countries, so that all people contribute to financing government services. The government makes economic decisions and runs key industries, as well as provides for the people, (jobs).