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Economy: the careful use or management of resources such as money, materials or labor (workers). Economic development depends on the production , distribution , and consumption of goods and services. . Production: the making of goods. Producers = owners and workers. - PowerPoint PPT Presentation
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Economy: the careful use or management of resources
such as money, materials or labor (workers).
Economic development depends on the production, distribution, and consumption of goods and services.
Production: the making of goods
Producers = owners and workers
Distribution: the passing out or selling of goods
Goods = products
Consumption: the use of goods and services
Consumers: people who buy goods and use the servicesServices: producers perform
Factors of Production - the ingredients, or elements needed for
production to occur.
Entrepreneurs- people who have the ideas that bring natural
resources, labor resources, and capital resources together to
produce goods.Natural Resources - raw materials used to make goods. (land,
water, forest, minerals, soil climate)
Labor Resources - workers needed to create goods and
services. (knowledge, skills, experience)
Capital Resources - money, buildings, machines, and
supplies needed.
IndustriesClassification Description Example Product
Agriculture Takes natural resources from the earth (mining, fishing, and farming are included)
Manufacturing
Makes products using the natural resources (construction, factories, and processing plants are included)
Wholesale The sale of goods in large quantities, as for resale by a retailer.
Retail The sale of goods or commodities in small quantities directly to consumers
Service Provides a service such as restaurants, supermarkets, hotels, hospitals, education, etc.
Economic Systems•Communism (command)- government decides what needs are to be met, found in unlimited governments
•Free Enterprise (market)– consumers decide what to produce and purchase, prices are determined by supply and demand, found in limited governments
• Socialism- some businesses and industries are controlled by the government; government provides many health and welfare benefits, found in both limited and unlimited governmentsThe main purpose of any economic system is
to produce and distribute goods and services.
Problems that all economic systems face: SCARCITYExamples:Lack of natural resourcesLack of workers(labor resources)Lack of money(capital resources)Lack of consumersLack of technology
Scarcity creates barriers to economic development.
Economic Indicators
Most common:Life Expectancy: the average age to which people in a country lives (gives clues about health care and nutrition.
Literacy Rate: shows the percentage of a country’s people who can read or write at an elementary school level.
Gross Domestic Product: the yearly average value of all goods and services produced within a country. GDP per capita (per person)
Economic Indicators are measures that show how a country’s economy is doing.
Country Life Expectancy Gross Domestic Product per Capita
Literacy Rate
Canada 81.38 $39,400 99%
Cuba 77.7 $9,900 99.8%
Mexico 76.47 $13,900 86.1%
Peru 72.47 $9,200 92.9%
Developing vs. Industrialized Developing Nations are countries with low levels of development. It is marked by few jobs in industry, poor services, low literacy rates, and low life expectancy.
Industrialized Nations are countries with high levels of development. It is marked by high quality education, advanced health care, good services, advanced technology and decent salaries.