2.1 - Intro to Economics

27/02/26

what is economics?

study of how to distribute resources by making decisions relating to production and consumption of resources

what kinds of resources are considered in economics?

• land: natural resources (renewable, non-renewable/finite and infinite)

• labour: health, education, and age of workforce

• capital: money or assets (often refers to something that can be used to help you start a new business)

why do we have economies?

To prevent scarcity caused by unlimited wants and limited resources

how do economies prevent scarcity?

• it helps society make decisions regarding three key questions?

  • what to produce

  • how to produce it

  • who gets it

right wing economies are also referred to as:

capitalism, free market, private enterprise economies

how does a right wing economy answer the three key questions?

• Focus: individualism, limited government (laissez-faire)

• What to produce: decided by demand

• How to produce it: however makes a profit for the supplier

• Who gets it: whoever can afford it (price system and wages)

examples of right wing economies?

• Great Britain, the United States and Canada during their industrial revolutions

left wing economies are also referred to as:

socialism, communism, centrally planned, public enterprise economies

how does a left wing economy answer the three key questions?

• Focus: collectivism, high level government intervention (socialism)

• What to produce: the government decides needs

• How to produce it: government (which is focused on creating jobs in the process)

• Who gets it: governmentally allocated to whoever needs it most

examples of left wing economies

• The USSR (1917-1991)

• Cuba (1953 – approx. 2014)

• China (1949 – mid 1990s)

• Vietnam (1975 – mid 1990s)

• Venezuela (1999- now???)

• North Korea (1948 – present)

how do we refer to mixed economies?

often known as welfare capitalism or democratic socialism, depending on the level of government intervention

how does a mixed economy answer the three key questions?

• Focus: take the benefits from both capitalism and socialism

• What to produce: decided by consumer demand, but the government will also ensure essential goods are being produced

• How to produce it: the best way for the supplier to make a profit, but government will have regulations, protect employment

• Who gets it: most goods based on ability to pay, some goods the government will provide (like social services)

example of mixed economies?

• Welfare capitalism – United States

• Mixed economy – Canada, United Kingdom

• Democratic socialism – Sweden, Norway, Denmark, Finland