Survival and basic needs ��Survival is the ability to live and function.�People’s basic needs are food, shelter, and clothing. �Interdependence is relying on others to fulfill basic needs.��Interdependence is necessary for survival because people cannot survive alone. We need food, shelter, and clothing to survive.If we were totally self-sufficient, and wanted a tee-shirt, for example, we would have to grow the cotton (find seeds, locate land, collect fertilizer, make tools, etc.) harvest, clean, gin (make cotton gin equipment, which would mean making the materials to make the cotton gin), spin (again, making our own spinning wheel, which would involve finding, cutting, milling wood, and assembling the spinning wheel), and weave the garment (cut the wood, make the loom) before assembling the fabric (where to find the needle?). It is obvious that, in order to survive, we count on the help of our neighbors. We are interdependent. ��Needs are expressed differently for each individual. Example: In an American society, it is common to eat hamburgers or steak; however, cows are considered sacred by those who practice the Hindu religion and are allowed to roam wherever they wish. For these people, eating cow meat is unthinkable. Different values are placed on these animals in different cultures. Similarly, an Eskimo can survive comfortably in an ice-house, or igloo. For a Texas, such a house would be unthinkable. The environment )climate, resources, political system, etc.) is the determining factor for the type of construction used. ��Despite their differences, both Texans and Eskimos need shelter; both Americans and Hindus need food. The commonality of all people is their recognition of basic needs.

Effects of unequal distribution on the economic factors of production��Look at the for sale section on Craigslist. Is any materials or services repeatedly requested? If so, does are these materials currently available in your community- or is it a rare good? ��Look at Craigslist.�A. List all of the categories.�B. Are any goods listed more often than others? Which ones?�C. In your estimation, why are these items commonly listed?�D. Do these items occur naturally in your environment?��If items were equally distributed across the earth (and thus, to all people in equal portions), there would NOT be a “Materials Wanted” section of the newspaper because everyone would have access to all the materials they need. �Resources are not equally distributed in the environment. ��

Concepts of opportunity cost and scarcity��Scarce is a description of resources that is not abundant.�Opportunity cost is the value of a scarce resource; depends upon how badly it is needed. �Production-possibilities curve is an illustration showing relationship between a procedure and consumer.�Economics is the study of how goods are made, distributed, and consumed. ��

Understanding circular flow, economic good, and free good��Sabrina bought a book. She is a consumer. �Farmer Brown grows corn. He is a producer.�“I’ll give you two movie passes if you bake me a pie.” This is an example of barter or trade, also called trade, barter.�Producers and consumers rely on eachother. Their interdependence is best illustrated by a feedback relationship called circular flow. �Something that has no value or worth is called a free good.�Economic goods are what we call items for which we are willing to pay. ��

Scarcity, specialization, market, supply, and demand��Law of scarcity is never having sufficient resources to acquire everything you want.�Specialization is concentrating at being good at one thing. �Market is the meeting of producers to barter their goods. �Demand is what people want. �Supply is what’s available to use as “payment” for an item. ��

Traditional economic system��People who move from place to place in search of their basic living requirements are called nomads.�The most basic economic system is called the traditional economic system. �Culture beliefs and habits are what help groups make decisions under the traditional economic system. �When we say that societies living under traditional economic system were passive we mean they reacted to what happened around them and were rarely in control. �The traditional economic system began to change when man began to grow crops and raise livestock.��

Understanding a command economic system��agrarian- command economic system�socialism- command economic system�tradition and custom- traditional economic system�taxes- command economic system�hunters and gatherers- traditional economic system�communism- command economic system�socialism- command economic system�nomads- traditional economic system�� Small nomadic hunting parties�development of agriculture�development of towns and cities�all aspects of people’s lives ruled by kings�trade association�people’s revolt against king’s tight control�� �

Adam Smith’s economic model��Norma wants to buy a television set. She looks in the telephone book and finds a listing for TV Town and All Appliance Store. She finally buys the television from TV Town. Some of the factors that might have influenced her purchase could be warranty, model features, price, availability, advertising, and recommendations.

�The owner of All Appliance Store finds out that Norma did not buy from his store. He might consider giving her a lower price, increase advertising, increase range of models offered, and improve customer service. Norma decides to purchase a VCR. This time, after shopping around, she buys from All Appliance Store. Competition describes the efforts TV Town and All Appliance Store are making to increase sales. ��

Karl Marx and Adam Smith��Communist Manifesto, 1848- KM�Businesses operate best when competition is allowed- AS�Advertising and competition are good- AS�Workers should overthrow business owners and government- KM�Profit is one way to measure how well a business is doing- AS

There is not a rich or poor class- KM�The Wealth of Nations, 1776- AS�Laissez-faire economics- AS�Communism- KM�No one owns a business; instead, the government owns everything- KM

John Maynard Keynes ��John Maynard Keynes represented the British at Bretton Woods.�The economic program Keynes supported before he developed his government spending plan was laissez-faire.�At the Bretton Woods Conference, John Maynard Keynes helped win the support for the World Bank. �John Maynard Keynes was also called the Baron of Tilton.

Basic terms and principles relating to the economic theory ��Nomad means someone who moves from place to place. �Someone who makes a good is a producer. �Socialism and Communism are not the same. �Specialization developed during the traditional economic system.�Trade and barter mean the same thing. �The law of scarcity applies to millionaires. �Something of worth is an economic good. �Capitalism is another name for the free enterprise system. ��Command economic system; job passed from father to son; government owns the land, tools, seed, water, and fertilizer which Farmer Brown uses to grow the corn. Government also owns the corn which he harvests. Farmer Brown gets treated the same whether he works hard for a big harvest, or not at all; no freedom. ��An open market is free enterprise system, which means, you are free to make your own decisions. �An example of a free enterprise system is capitalism.