Call to Order1. Describe two details in the picture.2. Using the picture, define the word: “Competition”3. Why might competition between two companies be good for consumers (people who buy a good)?

Economics: RecapThe study of:

Production (making goods)

Consumption (buying goods)

Distribution (selling goods)

An economy is where all of these actions occur together.

Northern & Southern Economies

North: Moved towards

industrialization “Industrialization” is

the development of industry, or an increase in manufacturing (through factories)

Needed people for factory jobs; some needed skills

South: Agriculturally based Depended on the

growing and selling of crops

Needed people for manual labor

Didn’t necessarily need people with skills

The Rise of Industry The North did not have good

enough land to rely on farming (agriculture) to make money

After the Civil War, people begin to create new products and machines.

Due to this, American life changed dramatically, and the US evolved from a largely agricultural nation into a largely industrial society.

Capitalism the economic system in

which factories, equipment, and other means of production are privately owned instead of owned by the government.

Changes in Communication & Transportation

Electricity was invented and brought dramatic changes to communication.

Telegraph lines were laid throughout the country

Alexander Graham Bell invented the telephone

The automobile and airplane were invented

Explosion of Industrial Growth

The growth of technology and creation of communication and electric power helped fuel American industry

Companies who had once been local expanded nation-wide

Systems of mass production came about and factories were used to produce goods in large quantities

Factories Work was done by specialized

machinery that could produce identical parts.

Unskilled workers were used to run the machines

Engineers divided up the production process so that each worker did a single task.

This sped up production and increased profits.

Increased production led to cheaper goods

Factors of Production

As businesses grew, they needed three factors of production:

1. Land- includes soil, forests, minerals, etc.

2. Labor- people to work

3. Capital- money, buildings, tools, machinery

Corporations A company that is

independent from its owners. That means, a “corporation” can own property, borrow money, sue, or be sued.

People can invest in a corporation by buying stock

Holding Company

When a company invests so much (buys so much stock) in other companies that they have a say in what the other companies do.

Competition

Two companies might compete for the same group of people’s business

Competition among corporations provide customers with a choice

Also drives down prices

Monopoly: a company that

dominates a particular industry

This reduces competition by buying or bankrupting competitors.

John D. Rockefeller was successful with this in the oil industry.

He bought out or merged with other companies; his competitors went bankrupt

Pools

A voluntary agreement among companies that fixes prices Divides business allocates sales and market territories

Horizontal Integration This was a way that

corporations got bigger

Owning all businesses in a particular field.

Example: Rockefeller of Standard Oil bought up oil refineries and gained control of the whole industry.

Vertical Integration Owning businesses

involved in each step of the manufacturing process

Example: Andrew Carnegie and his steel company: he bought iron mines, then the mills they were sent to, then ships and railroads that moved finished products. He gained control of the steel industry

Laissez-Faire

Means “hands off” or “allow to do” in French

Lawmakers were not willing to intervene in business

They adopted laissez-faire, meaning that the market would regulate itself and that government would not interfere in it.

This allowed businesses to do what they wanted, including raise prices and decrease competition.

Social Darwinism

This also did not want the government to be able to regulate business practices

“Survival of the fittest” in the business world

It argued that the government should leave businesses alone to succeed or fail on their own.

Which is Laissez Faire?

Statement A: "The best way to economic recovery is to subsidize industry so that it will hire more workers and expand production."

Statement B: "If jobs are not available, the government must create jobs for those who are unemployed."

Statement C: "According to human nature, the most talented people will always come out on top."

Statement D: "Our government is responsible for the nation’s economic well-being."

Which economic term applies to the scenario?

A new steel company is opened that is going to produce steel for all the major railroad companies in the United States. Rather than the government owning this, the factories, equipment, and other means of production are all bought and owned by one person- Ms. Zeins. Because Ms. Zeins privately owns all of the factors of production for this steel industry, she makes all the profits and becomes very rich.

Looking at these in Cartoons

Looking at these in Political Cartoons

Looking at these in Political Cartoons