CHAPTER 2 - CHAPTER 2 Economics The Creation and...

Info icon This preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
CHAPTER 2 Economics : The Creation and Distribution of Wealth
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
What is Economics ? Economics is the study of how society chooses to employ resources to produce various goods and services and to distribute them for consumption among various competing groups and individuals . * Resource development: is the study of how to use technology to increase the known resources of the world and to create the conditions that will make better use of those resources .
Image of page 2
The Economic Theory of Wealth Creation: Adam Smith 1 - Adam Smith advocated creating wealth through entrepreneurship. Rather than divide fixed resources, Smith envisioned creating more resources so that everyone could be wealthier . 2 - In 1776 Smith wrote a book called The Wealth of Nations in which he outlined steps for creating prosperity . 3 - The Invisible Hand: Adam Smith called the mechanism for creating wealth and jobs an invisible hand which turns self-directed gain into social and economic benefits for all . 4 - Smith is called Father of Capitalism .
Image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Capitalism Capitalism is an economic system in which all or most of the means of production and distribution are privately owned and operated for profit . 1 - In capitalist countries businesspeople decide how to use their resources and how much to charge . 2 - The driving forces behind wealth creation according to Adam Smith is : A- Freedom to keep the profits and to own land B- Incentives to work long hours and to work hard .
Image of page 4
Capitalism (Contd .( The disadvantages of capitalism are : 1 - Free market capitalism (capitalism without any government regulations( leads to inequality of wealth 2 - It leads to environmental damage 3 - Some governmental rules and regulations are necessary to protect people and the environment .
Image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Capitalism (Contd .( The advantages of capitalism are : 1 - The right to private property 2 - The right to keep all of a business’s profits after taxes 3 - The right to freedom of competition 4 - The right to freedom of choice
Image of page 6
Communism Communism is a system where all economic decisions are made by
Image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern