What is Socialism?

• Socialism is when the government owns some factors of production and distributes products and wages.

Who developed the principles of capitalism?

• Adam Smith

Who also created a book about the principles of capitalism, What is it called?

• Adam Smith

• The book is called the wealth of Nations

What did Smith mean by Laissez-faire economics?

• “To let alone”

• Government should stay out of the market place except to ensure competition.

The Invisible Hand

• Belief that individuals should should work for their on self interet

• They would be guided by “invisible hand” to use resources efficiently.

Characteristics

• Private property - the right to own and use our property as we choose within a certain in legal limits.

• Profit incentive - the driving force of capitalism, the ability to accumulate wealth.

• Competition - the struggle between buyers and sellers to get the best products at lowest price.

What is productivity?

• The amount of output that can be produced by a set amount of resources in a given period of time.

Productivity

• Productivity goes up when they can produce the same amount of output in less time.

• When they can produce more output with the same amount of resources in same time.

Increase Productivity

• Specilization is when people, businesses, or countries focus on what they can do best.

• Division of Labor is breaking down a job into small parts performed by different workers.

• Investing in Human center spending to improve worker skills.