Sunday, October 24, 2010

Honors Business Economics Chapter 2, 25 October 2010

Current Events:

Citizens Against Government Waste (CAGW) is a private, non-partisan, non-profit organization representing more than one million members and supporters nationwide. CAGW's mission is to eliminate waste, mismanagement, and inefficiency in the federal government.

USA-SKorea drill called off after complaints from Communist China.

China, others, get more power at IMF (International Monetary Fund).

With more than two months to go, 2010 is already the bloodiest year in Afghanistan since the overthrow of the Taliban in late 2001.

Obama Didn't Spend Enough. British Commentator: Will someone please shut Krugman up?

If you have not taken the Chapter 1 Test Make-Up you should be sure to take it today.


The Ch. 2 Sec. 1 Quiz is on Tuesday.


Chapter 2 Economic Systems and Decision Making

Chapter Overviews

Section 1: Economic Systems

Economic systems help societies provide for the wants and needs of their people. Three major economic systems have evolved over the years: traditional, command, and market economies. In the traditional economy, the WHAT, HOW, and FOR WHOM questions are answered by tradition, customs, and even habits handed down from generation to generation. In a command economy, a central authority answers the three basic questions. In a market economy, decision making is decentralized with consumers and entrepreneurs playing a central role. Most economies in the world today feature some mix of traditional, command, and market economies.

Chapter 2: Economic Systems and Decision Making


Drag and Drop




Section 2 Evaluating Economics Performance

The seven major economic and social goals used to evaluate the performance of an economic system are economic freedom, economic efficiency, economic equity, economic security, full employment, price stability, and economic growth. If the system does not perform as people would like, people can lobby for laws to achieve their goals. One example would be the Social Security program that was enacted to achieve the goal of economic security.

Rule of 72

Determinants of growth

Productivity and economic growth

Resolving Trade-Offs Among Goals, p. 46 Determining Cause and Effect:

Graphic Organizer

The action helps achieve the goals of economic security or full employment while working against the goal of economic efficiency.
On-the-Job Video Gaming, p. 47

Section 3 American Free Enterprise, p. 48

Free enterprise, another term used to describe the American economy, refers to the competition that is allowed to flourish with a minimum of government interference. A capitalistic free enterprise economy has five important characteristics: economic freedom, voluntary exchange, private property rights, the profit motive, and competition. Another key component is the entrepreneur, who is the risk-taking individual in the economy that starts new businesses and undertakes new ways of doing things in search of profits. The consumer is sometimes thought of as being "king" or sovereign of the market, and government is involved in the economy primarily because people want it to be involved. Because of the government involvement as the protector, provider, regulator, and consumer, the American economy can also be described as a mixed economy, or a modified free enterprise economy.

Guide to Reading

Section Preview

Content Vocabulary

free enterprise

voluntary exchange

private property rights


profit motive


consumer sovereignty

mixed or modified free enterprise economy

Taped in the 70s, Economist Milton Friedman informs Phil Donahue when asked to equate greed with capitalism, 2:30.

Companies in the News

Hot Growth at Claire's

Characteristics of Free Enterprise Capitalism, p. 49

Economic Freedom

Voluntary Exchange

Private Property Rights, p.50

Profit Motive


Reading Check


How does voluntary exchange work in the free enterprise economy?

The Role of the Entrepreneur

Reading Check, p. 51


Why are entrepreneurs considered both spark plugs and catalysts of the free enterprise economy?

The Role of the Consumer

Reading Check


What role do consumers play in a free enterprise system? p. 52

The Role of Government




Consumer, p. 53

Modified Free Enterprise

Reading Check

Why do Americans want government to play a role in the economy? Use specific examples.

Profiles in Economics

Tony Hawk

Tony Hawk: Gliding into the future, 4:37


1. How has Tony Hawk used his sport to develop into an entrepreneur?

2. How do you know that Hawk is careful about which products he brands? Explain.

3. What characteristic did Hawk's daily skateboarding illustrate?

4. Is this characteristic one that an entrepreneur needs?

Tony Hawk helped bring skateboarding to the mainstream and turn the sport into a multi-billion dollar industry. He has ridden the sport's peaks and valleys in popularity and hopes to grow his business as the athlete turned entrepreneur pushes the limits of the sport.


Hayek's 'The Road to Serfdom' in Five Minutes, 5:01


In-class assignment:

What do all forms of collectivism (command economy) lead to?
Are there differences--in terms of control exercised--between Nazism or Communism?
How is order achieved in these systems?
Can democracies be on the road to serfdom?

In the 1940s, Look Magazine made a comic strip of Hayek's classic book 'The Road to Serfdom'. Hayek went on to win the Nobel Prize in Economics in 1974.


Hayek's central thesis is that all forms of collectivism lead logically and inevitably to tyranny, and he used the Soviet Union and Nazi Germany as examples of countries which had gone down "the road to serfdom" and reached tyranny. Hayek argued that within a centrally planned economic system, the distribution and allocation of all resources and goods would devolve onto a small group, which would be incapable of processing all the information pertinent to the appropriate distribution of the resources and goods at the central planners' disposal. Disagreement about the practical implementation of any economic plan combined with the inadequacy of the central planners' resource management would invariably necessitate coercion in order for anything to be achieved. Hayek further argued that the failure of central planning would be perceived by the public as an absence of sufficient power by the state to implement an otherwise good idea. Such a perception would lead the public to vote more power to the state, and would assist the rise to power of a "strong man" perceived to be capable of "getting the job done". After these developments Hayek argued that a country would be ineluctably driven into outright totalitarianism. For Hayek "the road to serfdom" inadvertently set upon by central planning, with its dismantling of the free market system, ends in the destruction of all individual economic and personal freedom. Hayek argued that countries such as the Soviet Union and Nazi Germany had already gone down the "road to serfdom", and that various democratic nations are being led down the same road. In The Road to Serfdom he wrote: "The principle that the end justifies the means is in individualist ethics regarded as the denial of all morals. In collectivist ethics it becomes necessarily the supreme rule."


Activity: Interdisciplinary Connection
Read 19th-century short stories by Russian authors such as Anton Chekhov or Nikolay Gogal. As you read, list details that describe effects of the Soviet Union's command economy--for example, details about jobs, economic and social status, property rights, individual freedoms, and the government. Write a report summarizing the economic effects that you fin din the story.
BULGARIA - From a Command to a Market Economy, 4:43
1.1 Quiz
IBM Corp. has launched CityOne, an online interactive simulation game designed to enable local government officials find innovative solutions for energy, water, traffic, banking and retail problems in their communities.
Players can explore more than 100 simulated crisis scenarios in CityOne. The solutions must balance various financial, environmental, social and budgetary goals. The solutions include technologies such as business process management, service reuse, cloud computing and collaborative technologies.

HW email to or hand in hard copy.

1. Activity: Hands-On Economics

As with Tony Hawk, you should identify a special talent or skill that you have or would like to have that could serve as a basis for a business. What special considerations might arise because the product bears your name? How would you ensure that the product met the highest of standards? Each student should write a business plan--listing the product, the cost, and a budget--describing the business and addressing these issues. Include a drawing showing how you would like your name to appear on your product.


The Ch. 2 Sec. 1 Quiz is on Tuesday.


Friday: Ch. 2 Sec. 2 Quiz (Study page posted)

Honors World History II: HW for Next Week, Mon. - Fri.

Monday HW
1. p. 336, #1-3
Reminder: Quiz Ch. 11 Sec. 1
Email only if you answer (i.e., you voluntarily choose to participate):
Last week what I liked least about the class was . . .
Last week what I enjoyed most about the class was . . .
Tuesday HW
1. p. 337, Preview Questions, #1-2
2. p. 339, Picturing History, Why did the revolutionaries decide to use the guillotine to execute people?
Wednesday HW
1. p. 339, Reading Check, Examining, What were the differences between the Girondins and the Mountain?
2. p. 341, Connecting to the Past, #1
3. p. 342, Reading Check, Identifying, Whom did the Committee of Public Safety consider to be enemies of the state?
Thursday HW
1. p. 342, Reading Check, Evaluating, How did the French revolutionary army help to create modern nationalism?
2. p. 343, History Through Art, What factors helped Napoleon overthrow the Directory?
3. p. 343, Reading Check, Describing, Describe the government that replaced the National Convention?
Friday HW
1. p. 343, #4-6