Core Concepts & Vocabulary
Scarcity:
Limited resources vs. unlimited wants; forces choices.
3 Economic Questions (due to scarcity):
What to produce?
How to produce it?
For whom to produce?
3 Factors of Production:
Land (natural resources)
Labour (human effort)
Capital (money, tools, machinery)
Economics:
Study of how societies use scarce resources.
Capitalism (Market Economy):
Private ownership, competition, minimal gov’t involvement.
Socialism / Communism (Planned Economy):
More public ownership, government control over production and distribution.
Mixed Economy:
Combines capitalism & socialism. Canada = more mixed, USA = more market.
Shift Left vs. Shift Right:
Left = More gov’t control (e.g., public health care)
Right = Less gov’t control (e.g., lower taxes, privatization)
Supply & Demand:
Supply up + Demand down = Prices drop
Demand up + Supply down = Prices rise
Producers & Consumers:
Producers make goods/services. Consumers buy. Prices form where supply = demand.
Price, Supply & Demand Relationship:
Price rises when demand > supply.
Price falls when supply > demand.
Market Forces & Structures
Invisible Hand:
Market forces naturally balance supply and demand.
Shortage vs. Surplus:
Shortage: Demand > Supply
Surplus: Supply > Demand
Taxes:
Used to fund public services.
Boycott:
Consumers refuse to buy a product (usually for ethical/political reasons).
Fixed Prices:
Prices controlled/set by gov’t.
Labour / Labour Union:
Workers and their organized group to protect rights. Use collective bargaining.
Strike = workers stop work to pressure employers.
Winnipeg General Strike (1919):
Major strike for better wages and rights; shaped labour laws.
Business & Government Roles
Private Ownership:
Businesses and property owned by individuals or corporations.
Public Ownership:
Owned and run by government.
Crown Corporation:
Gov’t-owned business (e.g., Canada Post, CBC).
Monopoly:
One producer controls a market (e.g., utilities).
Bad: limits choice, raises prices.
Oligopoly:
Few companies dominate (e.g., cell phone providers).
Bad: limits competition, price fixing risk.
Competition Act:
Prevents monopolies, encourages fair competition.
Economic Systems Comparison
System | Ownership | Role of Government | Example |
Market | Private | Limited | USA |
Mixed | Private + Public | Moderate | Canada |
Planned | Public | High | Former USSR, North Korea |
Advantages of Market Economy:
Freedom, innovation, efficiency.
Disadvantages:
Inequality, lack of public services.
Advantages of Planned Economy:
Equality, basic needs met.
Disadvantages:
Less innovation, inefficiency.
Mixed Economy = Balance.