Economics in Motion

1
Chapter 3 Economics in Motion
2
8th Grade Economics
Section I Economic Activities
3
Objectives

• Compare and contrast the five (5) different
  economic activities
• Theorize and project where the United States
  economy headed

4
Economic Activities
The method of using the factors of production to
effectively and efficiency produce goods and
services
Section I Economic Activities
5
Economic Activities
Primary
Raw materials
Diversify
Secondary
Manufacturing
Tertiary
Services
Quaternary
Quinary
Information
Government
Section I Economic Activities
6
Economic Activities
Diversify
Primary
Raw materials
Historically
Examples
Location

• Hunting and gathering
• mobile with the herds or climate
• Agriculture revolution
• domestication
• Subsistence
• Commercial

• Crops
• Lumber
• Mining

Section I Economic Activities
7
Primary Activities
Factors of Production
Tribes organized into farmers, hunters and other
task
Move with the seasons and/or herds
Land
Labor
Capital
Entrepreneur
Technology
Trade goods and maybe services
Weapons, fire, cooking pots, shelters
Agricultural revolution
8
Economic Activities
Primary
Raw materials
Diversify
Secondary
Manufacturing
Tertiary
Services
Quaternary
Quinary
Government
Information
Section I Economic Activities
9
Economic Activities
Diversify
Secondary
Manufacturing
Definition
Examples
Location
Changing raw materials into finished goods
(Industrial revolution)

• Wheat to bread
• Ore to steel
• Lumber to Plywood

Either near the raw material or
market (Distribution)
Section I Economic Activities
10
Economic Activities
Secondary
Distribution
Situation (product)
Site (location)
Near the resource
Near the market

• Labor
• Land
• Capital

• Bulk gaining
• Perishable

• Bulk reducing

Section I Economic Activities
11
Distribution Factors
Section I Economic Activities
12
Secondary Activities
Outsourcing, productivity, division of labor,
documented or undocumented specialization,
education/training, factory system
Site (location) land, capital labor
Factors of Production
Situationbulk gaining, reducing, perishability
Land
Labor
Machines, mass production
Investors, sales
Capital
Entrepreneur
Technology
Henry Ford, assembly line,
Industrial revolution
13
Economic Activities
Primary
Raw materials
Diversify
Secondary
Manufacturing
Tertiary
Services
Quaternary
Quinary
Government
Information
Section I Economic Activities
14
Economic Activities
Tertiary

• Services
• Consumers
• Business

Quaternary
Quinary
Information
Government
Section I Economic Activities
15
Economic Activities
Location near the customer
Consumer
Business
Tertiary

• Retail
• Clothing
• THD
• Rustees

• Transportation
• Publishing
• Broadcasting

• Personal
• Baber
• Car dealer
• Diner

• Producers
• Insurance
• Banks
• Real-estate

Section I Economic Activities
16
Economic Activities
Tertiary
Quinary
Quaternary

• Location - anywhere
• Skilled workers

• Health
• Education
• Firefighters
• Police
• Government

• Information processing and distribution
• Research and development
• Entertainment

Section I Economic Activities
17
Tertiary Activities
Factors of Production
Skilled and educated
Site location
Land
Labor
Electronics
Investors
Capital
Technology
Entrepreneur
Bill Gates, Doctors, Scientist
Information revolution Medical revolution
18
Chapter 3 Economics in Motion
Section II Economic Systems
19
Objectives

• Compare and contrast the three (3) different
  economic systems
• Analyze a market economy, who has an advantage
  and who is at a disadvantage

Section II Economic Systems
20
Economic Systems
Traditional
Command
Market
Section II Economic Systems
21
Traditional Economy
The allocation of scarce resources, and nearly
all other economic practices, stems from rituals,
habits, customs, community leader(s)
The individual role is designed by the village
elders or ancestors
Factors of Production
Advantages
Disadvantages

• Discourages new ideas and methods
• Stalls economic growth
• Limits creative
• Lowers standards of living very little wants

• Land family property
• Labor family, friends or assigned by community
  leader(s)
• Capital more survival, little to no surplus
• Technology limited to customs and traditions,
  changing with the times
• Entrepreneurs discouraged

• What based on village or community needs
• How generational, you are born into your
  occupation, increased productivity
• For Whom the community, very little for
  individual wants

Economic Activity Primary
Section II Economic Systems
22
Traditional

• Societies Inuit or Amish
• Countries
• Developing countries
• Sub-Sahara African tribes

Section II Economic Systems
23
Command Economy
The allocation of resources, factors or
production, economic decisions and nearly all
other economic practices are controlled by a
central authority (dictator)
The individual role is controlled or determined
by the dictator
Factors of Production
Advantages
Disadvantages

• Discourages new ideas and methods
• Controls economic growth
• Limits creative
• Lowers standards of living very little wants
• Limited desire to work hard

• Land dictator
• Labor can change your occupation over night
• Capital goes to the government to support the
  country
• Technology usually limited
• Entrepreneurs usually controlled by the
  dictator

• Changes quickly
• Eliminates social class, except government
  officials
• What Government needs
• How Dictator
• For Whom Government

Economic Activity Secondary / Tertiary
Section II Economic Systems
24
Command

• Current
• North Korea
• Cuba
• Historical
• Soviet Union
• China

Section II Economic Systems
25
Market Economy
Relies on the forces of supply and demand
People and firms act in their own best interest
to answer the WHAT, HOW and FOR WHOM questions
Advantages

• adjusts w/ change over time big cars vs small
  cars
• What individual freedom to buy or sell
• How best way to make money
• For Whom your decision
• Limited government involvement
• Variety of goods and services
• High degree of consumer satisfaction

Factors of Production
Disadvantages

• Land Do what you want on your land
• Labor economic freedom work where you want
  start your business
• Capital Use your money to buy what you need
• Technology Economic Freedom
• Entrepreneurs economic freedom

• Rewards on production
• Workers and businesses face uncertainty as a
  result of competition and change
• Limited public goods defense, education and
  healthcare
• Vulnerable to market failures

Economic Activity Tertiary / Secondary
Section II Economic Systems
26
Market

• Examples
• The United States
• Canada
• Britain
• Japan
• Germany
• France

Section II Economic Systems
27
Chapter 3 Summary
Command Economy
Market Economy
Quaternary
Quinary
Tertiary Activities
Deindustrialization
Site
Secondary Activities
Situation
Traditional
Industrial revolution
Domestication
Primary Activities
Agriculture revolution
Hunting and gathering
Section II Economic Systems
28
Introduction to Economics
Glossary
29
Chapter 3 Glossary

• Economic activity The method of using the
  factors of production to effectively and
  efficiency produce goods and services
• Hunting and gathering The idea of moving with
  the primary food source do to animal migration of
  weather conditions which cause plants yields to
  decrease.
• Agriculture revolution the domestication of
  plants, which allowed people to develop
  communities and civilizations reduced the need
  to move with the herds and climate control the
  growth of plants and animals.
• Industrial revolution the use of machinery to
  conduct tasks that were commonly executed by
  human labor more efficient and productive.
• Medical revolution the improvement of medical
  practices, equipment and procedures which
  extended life expectancy
• Information revolution the massive improvements
  of processing and distributing large amounts
  information in a timely manner
• Primary activities groups and/or persons are
  directly reliant on basic resources, animals and
  plants, for survival
• Secondary activities the manufacturing of raw
  materials to produce finish goods
• Manufacturing the processing of one or more raw
  materials to create a new product (finish good)
  by the use of machines
• Tertiary activities are services oriented jobs
  to assist the consumer and individual businesses
• Quaternary a modern day fifth activity which is
  the processing of information
• Quinary necessary jobs to ensure a country can
  function, usually governmental jobs

30
Chapter 3 Glossary

• Situational factor the idea that a product under
  goes changes during the manufacturing process
• Site factor the aspects which causes industries
  to consider a particular location
• Consumer service services that a business
  provides for it customers
• Business service services provide by businesses
  to other businesses
• Retail service the purchasing of a good
• Personal services the purchasing of someone's
  skills or abilities
• Market economy People and firms act in their
  own best interest to answer the WHAT, HOW and FOR
  WHOM questions
• Traditional economyThe allocation of scarce
  resources, and nearly all other economic
  practices, stems from rituals, habits, customs,
  community leader(s)
• Command economy The allocation of resources,
  factors or production, economic decisions and
  nearly all other economic practices are
  controlled by a central authority (dictator)
• Deindustrialization the reversal of
  industrialization, the beginning of the
  transformation to a tertiary economy

31
Chapter 3 Glossary

• Perishable products that have a short shelf
  life, around 3 weeks
• Bulk gaining when a product gains weight or size
  after manufacturing
• Bulk reducing when a product losses weight or
  size after manufacturing

32
Chapter 3 - Quiz

• (4 pts) Name the two (2) types of markets and
  explain each
• (3 pts) List the three (3) economic activities.
• (4 pts) Which major revolutionary events occurred
  in the first and second economic activities.
• (2 pts) Name the two (2) distribution factors
  considered during the manufacturing activity.
• (7 pts) Outline those distribution
  considerations.

Section II Economic Systems
33
Quiz

• (6 pts) List the three (3) economic activities?
  (in order from earliest to latest)
• (1 pt) Name the revolution that occurred during
  the the first economic activity.
• (4pts) Name the two (2) distribution factors
  that are considered during the second economic
  activity.
• (9 pts) Briefly explain the each of the economic
  activities.

Chapter 2