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Unit 2 Economic Systems

Performance Standards: Demonstrate understanding of the basic economic problems and questions that must be answered by every society. SS.D.2.4.2 understand how price and quantity demanded relate, how price and quantity supplied relate, and how price changes or controls affect distribution and allocation in the economy.

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Unit 2

Economic Systems

READ: Human beings have organized economic systems that answer certain basic questions involving how wants and need are distributed. While you are studying this unit, pay careful attention to the answers to several questions: What are the 4 factors of production and what is their role in the production of goods and services? What are the economic questions that all economic systems must answer? What should be produced? Who get what and how much? How should a product be produced? Who get to answer the first five questions? What are the major types of economic systems and examine their differences and similarities.

1. Read Chapter 2, pages 13 19 in your textbook, Economics for Everybody and write definitions for the 12 Key Terms on page 13. 2. Complete the exercise Answering the Basic Economic Questions (1-10) in this guide. 3. Complete Factors of Production in this guide, using complete sentences to formulate your response to each. 4. Using information from your readings, complete Economic Systems (1-9) and (1-12) in this guide. 5. Complete Matching (1-9) and Multiple-Choice (1-7) exercises in your text on pages 2021. 6. Turn in all completed work and ask your Instructor for Unit 2 Test. Have your Instructor evaluate your work on this Unit. If the results are not good enough for you to move on to the next unit, you will need to review the readings, your worksheets and your test work.

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Unit Two Economic Systems

Answering the Basic Economic Questions


Listed below are the five basic economic questions every society must answer. The statements that follow are economic decisions. Next to each statement, write the letter of the question it most directly answers. One example has been done for you. A. What should be produced? B. How much should be produced? C. How should the products be produced? D. Who gets what and how much? E. Who answers the first four questions? 1. Canada passes a law providing free medical care for all its citizens. 2. Thailand decides to give its people more economic freedom. 3. Ford Corporation decides to reintroduce the convertible auto- mobile. 4. Tampa passes an ordinance to establish a kindergarten open to all five-year-olds. 5. ZBX Corporation buys 50 acres of prime farmland to build its new corporate headquarters. 6. Farmers decide to double their wheat crops while cutting back slightly on their soybeans. 7. Chrysler replaces assembly-line workers with robots at its Pontiac plant. D

8. The tribal leaders decide to resist any more changes in their traditional economy. 9. The government decides to ration gasoline. Every car owner is allowed to purchase only 10 gallons per week. 10. At the Toys R Us Factory, all the toys are made by hand.

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Unit Two Factors of Production The illustration below shows the factors of production that might be used in a small business. Study the illustration and then fill in the blanks with the appropriate responses.

In the illustration which items represent each of the factors of production? Land

Labor

Capital

Entrepreneurship

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Unit Two Economic Systems


Suppose you go to the supermarket and buy a box of corn flakes. Each of the four factors of production went into the making of this cereal. Listed below are some of the things used in the production and distribution of your corn flakes. Label each item LD for land, LR for labor, C for capital, or E for entrepre- neurship. 1. 2. 3. 1. 2. 3. 4. 5. 6. 7. 8. 9. supermarket manager delivery truck prairie farm worker grocery clerk supermarket oil used for fertilizer box-making machinery owner of cereal company storage warehouse farm machinery cashier

Consider the four factors of production that went into the making of this book. Label each item. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. trees computers publishing executive salesperson editor petroleum oil used for fertilizer book presses word processing specialist typesetter storage shelves publishers building site

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