Salerno's Classroom Celebrates America!
Economics Chapters 1,2,3
AP Government Summer Assignment
AP Chapters 1,2
AP Chapter 3
AP Chapter 4
AP Chapter 5
AP Chapter 6
AP Chapter 7
AP Chapter 8
AP Chapter 9
AP Chapter 10
AP Chapter 11
AP Chapter 12
AP Chapter 13
AP Chapter 14
AP Chapter 15
AP Chapter 16
U.S. History Chapters 1, 2, 3
U.S. History Chapter 4
U.S. History Chapter 5
U.S. History Chapter 6
U.S. History Chapter 7
U.S. History Chapter 8
U.S. History Chapter 9
U.S. History Chapter 10
U.S. History Chapter 11
U.S. History Chapter 12
U.S. History Chapter 13
U.S. History Chapter 14
U.S. History Chapters 16,17,18
U.S. History Chapters 19,20,21
U.S. History Chapters 22,23
U.S. History Chapters 24,25
U.S. History Chapters 26,27
U.S. History Chapters 28,29,30
U.S. History Chapter 31
U.S. History Chapter 32
U.S. History Chapter 33
US Government Chapters 1,2
US Government Chapter 3
US Government Chapters 10,11,12
US Government Chapters 13,14
US Government Chapter 18
US Govt Chapters 19,20,21
Remembering 9/11/01
The Civil Rights Movement
Economics Chapters 1,2,3
Eco Chapt 9
Eco Chapters 6,7,8
Eco Chapt 13
Eco Chapter 15
Eco Chapt 21



     The Economic way of thinking   

The  study of how a society utilizes its natural resources.


-the major question is always


{   coal, oil, iron ore, lumber, etc..}


The study of how a society can divide its scarce       resources to satisfy its unlimited wants


*   Problems

1. Population- 1930-2Billion




2. Land Mass- 2/3 world is covered              by      water





The Major Economic Resources


1. Land - the gift of nature, the source of all wealth


2. Labor- the human effort used in production


3. Capital-  the tool, methods and means of production



3 Basic Economic Questions


1. What should be produced?


2. How should the products be    produced?


3. Who gets what and how much?




**Who answers the three questions?**



            John Q. Public


We apply a theory (a model)

to help solve these questions


using a specific theory we can make predictions


When we apply theory to business

We keep certain factors in mind


Budget constraint

What and how much can be produced with a limited amount of income.


Eg. Production is based on what can be afforded by the average consumer






Entrepreneurship- the talent and skill used in private ownership of business, manages each the basic economic resources.



He may take risks, but protects himself through insurance


(the Virginia Company of Britain had insurance)


-Protection against large losses

-Figures are calculated by net worth and the earning power of an individual.









*The Study of a Nation's Economic

system aka macroeconomics.


Four Major Economic Systems


1) Tradition

   Antiquity (geographical factors)

   Manor System (Middle Ages)


(new markets, exploration



2) Command Economy

Socialism and Communism, systems where the government plans and dictates and monitors the means of production.


Karl Marx’s theory of utopia


(brought on by the casualties left behind during unchecked capitalism)


achieved through the dictatorship of the proletariat



The former Soviet Union is an example of how a command economy cannot work.


(lack of incentive, apathy, costs)



3) Free Market

   A total free market - Rugged        Individualism  (laissez faire

of 18th & 19th Centuries)

   Vanderbilt (railroads)

   Carnegie (steel)

   Rockefeller (oil refining)

   Morgan (all the above, banking)



4) Mixed

   ***American Capitalism***

We classify ourselves as a mixed economy because of government regulation and periodical stimulation.




eg. Keyenesian Economics

applied to the US Economy during the Great Depression.

(Government intervention)



 Reagonomics- deregulation of federal control, tax cuts, supply-side economics


In the US we promote a Free Market Economy but not a pure free market)


US style of a Mixed Economy


*Government builds, maintains roads


*sets up and monitors banks (FED)


*builds canal and dams


*Collects Taxes; Tariffs





Scarcity and dependence


Do we make decisions as a country based on our wants and needs?


*US and Foreign Oil*


What drives the price of oil? 


*US and Japan*

Unique relationship of products/markets/military



The Political agenda of candidates running for office may center on




Democrats-   more government backed programs (regulation)


Consumer protection


Incentives for domestic firms


Republicans -  Less government intervention



                  tax cutting



                  laissez faire 





Capitalism  (Adam Smith)

1. Private Property


2. Free Enterprise


3. Competition


4. Profit


the necessary ingredients to form a successful business or firm in the free market.


A study of production or an economic activity aka microeconomics.


Four types of Economic activities


1.   Production -  the producing  and marketing of goods and services


2.   Consumption - usage of the consumer, satisfying a need


3.   Exchange - compensation for goods or services


4.   distribution - wealth received from original natural resource


All Four are found on a Flow Chart


Flow charts (circular flow) actually study the relationship of each economic activity and traces them.


Where does the average American fit on the flow chart?


*If you are a factory worker in the production of automobiles, you may also be a consumer on the automobile manufacturing flow chart.


*Same for the salesman

*Same for glassmaker

*tire manufacturer ..ect….


-          economic principles

are formed and applied when studying these relationships



In a free market and mixed economy, Demand governs prices and quantity

Sometimes called the Invisible Hand

(What the consumer wants)


Utility – the satisfaction one receives as a consumer of goods or services


* meal satisfaction at a restaurant_

* using a taxi cab

* retaining an attorney

* a visit to a doctor


The producer/supplier concerns

Economic profit

The difference from your gross receipts and production costs


*economists study particular areas


The Relationship Between





Producers/consumers MUST CONSIDER

Alternatives other possible ways a producer/buyer may act



The price of a new 2007 car is at its maximum point in July 2006

The consumer knows this and some will pay the maximum cost for it.


The consumer also knows that if he/she waits until September 2006, incentives/savings appear to lower the price.


December 2006 –   lower price

February 2007 –   lower price

March    2007  -     lower price

April-June 2007 – last/final price




This is all part of the

Decision matrix

A table showing comparative choices

When making alternative decisions.



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