QI Week 2 Introduction to

Applied Economics
Review
Performance Task 2.1

Define each Economic

Terms using a dictionary
and/or internet.
End of the Task
What are resources?
Performance Task 2.2

1.What does an individual need to

survive?
2.How do individuals obtain the things
they need to survive?
3.What does society as a whole need to
survive?
End of the Task
Needs Vs. Wants
Performance Task 2.3: What is the difference
between needs and wants?
Desire Essential
Inessential Limited
May change over time.
May remain constant over time.
May result in disappointment.
May result in onset of disease or even death. Necessity
Something you must have.
Something you wish to have. Unlimited
End of the Task
Needs vs. Wants
Needs Wants
Needs refers to an Wants are described as
individual’s basic the goods and services,
which an individual like
requirement that to have, as a part of his
must be fulfilled, in caprices.
order to survive.
Basis for Comparison Needs Wants

Nature Limited Unlimited

Something you wish to

What is it? Something you must have.
have.

Represents Necessity Desire

Survival Essential Inessential

May remain constant over

Change May change over time.
time.
May result in onset of May result in
Non-fullment
disease or even death. disappointment.
Performance Task 2.4: Classify each term/s.

Resouurces

Land Capital Labor Entrepreneurship

Performance Task 2.4: Classify each term/s.
airports Enterprise
Animals equipment
Buildings facilities
buildings factories
capital Farms
Copper Fisheries
Performance Task 2.4: Classify each term/s.
Food innovator
Gas interest
Gold Iron
Income Jewels
initiator labor
innovator
Performance Task 2.4: Classify each term/s.
Land processes
machinery production
manufactured aids Profit
Mineral railways
Oil relationship builder
pencil risk taker
Performance Task 2.4: Classify each term/s.
road tracks
Silver vehicle
strategic decision maker Wages
technologies Water
Timber Wealth
tools
End of the Task
Details of the Resources
Details of the Resources
Land includes all natural resources, whether
they be food, mineral, jewels or acreage. All
things that are preexisting on Earth without the
interference of man are put into this category.
That is not to say that man does not have to help
renew these resources, but they would be here if
man did not use them up
Timber Land Fisheries
Farms Food Animals
Mineral Jewels Gold
Iron Silver Oil
Gas Copper Water
Details of the Resources

Labor is a resource provided solely by

man whether it is in the form of physical or
mental labor that man provides. For instance,
there may be fruits they grow on trees, but
man has to pick them and man has to come
up with the idea to pick and consume them.
Details of the Resources

Capital is any resource that helps

us to provide some type of product
or service. From the pencil that you
use to the school you use it in, these
are capital resources
Factors of Capital

Fixed Capital. It includes new

technologies, factories,
buildings, machinery and
other equipments.
Factors of Capital

Working Capital. It is stocked

of finished goods or
components. These goods or
comonents will be utilized in
the near future.
Factors of Capital
Capital Productivity. New features of capital
building, machinery or technology are commonly
used to improve the productivity of the labor.
Such as the new ways of farming helps to
enhance the productivity of the agriculture sector
and give more valuable jobs in this sector with
motivates people to come out for work.
Factors of Capital

Infrastructure. It is a stock of
capital that is used to maintain
the whole economic system.
Such as roads, railway, airports,
etc.
Buildings production facilities
equipment vehicle technologies
factories buildings machinery
roads railways tracks
airports manufactured aids pencil
tools processes
Details of the Resources
Entrepreneurship is considered a factor pf production beacuase
economic resources can exist in an economy and not be transformed
into consumer goods. Entrepreneurs usually have an idea for creating a
valuable good or service and assume the risk involved with the
transforming economic resources into consumer products.
Entrpreneurship is also considered a factor of production since
someone must complete the managerial, functions of gathering,
allocating and distributing economic resources or consumer products
to individuals and other businesses in the economy.
Income wealth labor
wages capital interest
Profit enterprise initiator
innovator strategic decision maker
risk taker relationship builder innovator
Consider you own Household
Performance Task 2.5: Consider you own
Household
1. What type of labor does your
household provide? (Name at least one
labor resource.)
2. What land resource is used when
performing this type of labor? (Name at
least five land resources.)
Performance Task 2.5: Consider you own
Household
3. What capital resource is used when performing
this type of labor?(Name at least 5 capital
resources.)
4. How does scarcity have an impact on providing
this type of labor? (Come up with at least 3 ways
that scarcity could impact this type of labor.)
End of the Task
Why Economic Systems are
Important?
Performance Task 2.6: Why Economic Systems
are Important?
a. String: flying line (recommended 30 pound
Nylon)
b. 2-ply plastic bags (at least 2 feet wide and
4 feet tall)
c. Electrical insulation tape (black tape)
d. Hard-wood dowel (5 mm in diameter)
Performance Task 2.6: Why Economic Systems
are Important?
1. What could be made with the
products?
2. Who would want the finished
product?
3. Who determines who would get
the finished product?
End of the Task
Explain why most economies
are mixed.
Performance Task 2.7: What is the difference
between Command Economy and Market
Economy?
Demand decides the output quantity. Dissimilar income distribution
Division of labor Full control
Government Government decides the output quantity.

Government ownership Individual ownership

Little influence NO division of labor
Price is set by supply and demand. Price is set by the government.
Private owners Similar income distribution
End of the Task
 Market Economy
Command Economy

Controlled by private owners Controlled by the government

Government has little influence over the Government has its full control over all the
economic activities economic activities

Market is based on the division of labors No division of labor is involved

Price of goods and services is set by the supply Prices are determined by the government
and demand decision makers
Ownership of land and resources are with Land and other resources are owned by the
individuals or firms government

Demand decides the quantity of output Government decides the quantity of output

Income distribution is not similar Fairly equal income distribution practices

Economic Systems
The traditional economic system is the most traditional and ancient
types of economies in the world. Vast portions of the world still
function under a traditional economic system. These areas tend to be
rural, second- or third-world, and closely tied to the land, usually
through farming. In general, in this type of economic system,
a surplus would be rare. Each member of a traditional economy has a
more specific and pronounced role, and these societies tend to be very
close-knit and socially satisfied. However, they do lack access to
technology and advanced medicine.
Economic Systems

In a command economic system, a large part

of the economic system is controlled by a
centralized power. For example, in the USSR
most decisions were made by the central
government. This type of economy was the
core of the communist philosophy.
Economic Systems

In a free market economy, firms and

households act in self-interest to determine
how resources get allocated, what goods get
produced and who buys the goods. This is
opposite to how a command economy works,
where the central government gets to keep
the profits.
Economic Systems
A mixed economy is a combination of different types of
economic systems. This economic system is a cross
between a market economy and command economy. In
the most common types of mixed economies, the
market is more or less free of government ownership
except for a few key areas like transportation or
sensitive industries like defense and railroad.
Performance Task 2.8

Identify each statement whether

Advantage or Disadvantage. Identify also
whether the statement is under
Traditional Economic System, Command
Economic System, Market Economic
System or Mixed Economic System.
What type of impact economic
systems have on businesses?
Performance Task 2.8
1. A common problem is that the state run industries are often
subsidized by the government and run into large debts because
they are uncompetitive.
2. Businesses invest heavily in research and development.
3. Consumers pay the highest price they want to, and businesses
only produce profitable goods and services.
4. Due to the fiercely competitive nature of a free market,
businesses will not care for the disadvantaged like the elderly or
disabled.
5. Governments can create safety net programs like healthcare or
social security.
Performance Task 2.8
6. If executed correctly, the government can mobilize resources on
a massive scale.
7. In a mixed economy, governments can use taxation policies to
redistribute income and reduce inequality.
8. It is hard for central planners to provide for everyone’s needs.
9. Since the market is driven solely by self-interest, economic
needs have a priority over social and human needs like providing
healthcare for the poor.
10. The government can focus on the good of society rather than
an individual. This focus could lead to a more efficient use of
resources.
Performance Task 2.8
11. The government can intervene to correct market failures.
12. There are criticisms from both sides arguing that sometimes
there is too much government intervention, and sometimes there
isn’t enough.
13. There is a lack of innovation since there is no need to take any
risk.
14. There is less government intervention than a command
economy.
15. This competition for resources leads to the most efficient use
of the factors of production since businesses are very competitive.
Performance Task 2.8: Key Answers
1. DMECS 9. DFMES
2. AFMES 10. ACES
3. AFMES 11. AMECS
4. DFMES 12. DMECS
5. AMECS 13. DCES
6. ACES 14. AMECS
7. AMECS 15. AFMES
8. DCES
End of the Task
 Advantages and Disadvantages
of a Command Economy System
Advantages of Command Economic Systems

If executed correctly, the

government can mobilize
resources on a massive scale.
This mobility can provide jobs for
almost all of the citizens.
Advantages of Command Economic Systems

The government can focus on

the good of society rather than
an individual. This focus could
lead to a more efficient use of
resources.
Disadvantages of Command Economic
Systems
It is hard for central planners to
provide for everyone’s needs. This
challenge forces the government to
ration because it cannot calculate
demand since it sets prices.
Disadvantages of Command Economic
Systems
There is a lack of innovation
since there is no need to take
any risk. Workers are also forced
to pursue jobs the government
deems fit.
Advantages and Disadvantages
of a Free Market Economy
System
Advantages of a Free Market Economy

Consumers pay the highest price

they want to, and businesses
only produce profitable goods
and services. There is a lot of
incentive for entrepreneurship.
Advantages of a Free Market Economy

This competition for resources

leads to the most efficient use of
the factors of production since
businesses are very competitive.
Advantages of a Free Market Economy

Businesses invest heavily in research

and development. There is an
incentive for constant innovation as
companies compete to provide
better products for consumers.
Disadvantages of a Free Market Economy

Due to the fiercely competitive nature of

a free market, businesses will not care for
the disadvantaged like the elderly or
disabled. This lack of focus on societal
benefit leads to higher income inequality.
Disadvantages of a Free Market Economy

Since the market is driven solely by self-

interest, economic needs have a priority
over social and human needs like
providing healthcare for the poor.
Consumers can also be exploited by
monopolies.
Advantages and Disadvantages
of Mixed Economc System
Advantages of Mixed Economies

There is less government intervention

than a command economy. This results in
private businesses that can run more
efficiently and cut costs down than a
government entity might.
Advantages of Mixed Economies

The government can intervene to correct

market failures. For example, most
governments will come in and break up large
companies if they abuse monopoly power.
Another example could be the taxation of
harmful products like cigarettes to reduce a
negative externality of consumption.
Advantages of Mixed Economies

Governments can create

safety net programs like
healthcare or social
security.
Advantages of Mixed Economies

In a mixed economy,
governments can use taxation
policies to redistribute income
and reduce inequality.
Disadvantages of Mixed Economies

There are criticisms from both

sides arguing that sometimes
there is too much government
intervention, and sometimes
there isn’t enough.
Disadvantages of Mixed Economies

A common problem is that the

state run industries are often
subsidized by the government
and run into large debts because
they are uncompetitive.
Performance Task 2.9

Students will write a five

paragraph essay describing the
strengths and weaknesses of three
economic systems. Be sure to
include a strong introduction and
conclusion.
End of the Task
References
• https://www.intelligenteconomist.com/types-of-economies/