Understand the role of business in the global economy.
Understand economic systems.
How do businesses satisfy needs and wants?
What are the 6 steps necessary for making choices?
What is the relationship between who answers
economic questions and the type of economic systems that exists in a country?
What are the self-regulating principles of a market
economy?
SATISFYING
NEEDS AND
What are
needs?
Required in order to live
What are
wants
?
Things that add comfort and
pleasure in your life.
What are
goods
?
things that you can see and touch
What are
services
?
activities that are consumed at the same time
they are produced.
The United States economy is the
largest producer of goods and services
in the world.
How do businesses use
economic resources
to
produce goods and services?
Economic Resources:
also called factors of
production, are the means through which goods
and services are produced
The types of economic resources are:
Natural
Human
Capital
What are
natural
resources
?
Raw materials produced by nature.
Many natural
resources are
nonrenewable.
What are
human
resources?
The people who
contribute physical and mental energy to the
production process.
What are
capital resources
?
tools, equipment, and buildings that
are used to produce goods and
services
.
What is the
basic economic problem
?
The
basic economic problem
exists due
to limited resources for satisfying
unlimited needs and wants.
What is
scarcity
?
not having enough resources to satisfy the
unlimited needs and wants.
SATISFYING NEEDS AND WANTS
CONTINUED
What is the purpose of
economic
decision-making
?
the process of choosing which wants, among
several options, will be satisfied.
What happens to choices in a
tradeoff
?
the process of giving up something for gaining
something else.
What is
opportunity cost
?
the value of the next-best alternative that you did
not choose.
http://
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SIX STEPS OF
ECONOMIC
What is economic decision-making?
means of choosing a course of action among several
alternatives.
What are the 6 steps of economic decision-making?
1.
Defining the problem
2.
Identifying choices
3.
Evaluating the advantages and
disadvantages of each choice
4.
Choosing one choice
5.
Acting on the choice
6.
Reviewing the decision
Try to solve a problem
Problem
: Adjust the foundation of a house
Choices
:
Ignore the problem
Contact companies located in the same city
Contact companies located in the next city
Contact companies located in other cities
What choice would you make?
Some advantages
: location of local
companies, companies that guarantee
of services, and companies that
provides simple explanation of
necessary services
Some disadvantages
: prices for
services and location of company in
next city or other cities
Choosing one choice
: A local company
that guarantees services and provides
simple explanation of services.
Acting on choice:
Schedule for local
company to provide services of adjusting
foundation of house.
Reviewing decision
: Routinely check
on condition of foundation of house.
What are the three economic questions that all economies must answer?
ECONOMIC SYSTEMS
•
What to produce?
•
How to produce?
What is an
economic system
?
a nation’s plan for answering the three economic
questions.
The main types of economic systems are:
Command or Communist
Market
Traditional
Mixed
Who owns the resources in the main
types of economic systems?
Command
Market
Traditional
Who answers the economic questions?
ECONOMIC SYSTEMS
Centered on family
Government
MARKET ECONOMY
SELF-REGULATING
•
What is
capitalism
?
•
the freedom of consumption and
production of goods and services.
•
What type of economic system
The four principles of U.S. economic system are:
Private property
can own, use, or dispose of things of value.
Freedom of choice
can make decisions independently and must accept consequences of those decisions.
Profi t
money left from sales after all of the costs of operating a
business have been paid.
Competition
the rivalry among businesses to sell their goods and services.
What is the role of consumers in a market economy?
A consumer buys and uses goods and services.
Consumers decide what to buy, where to buy, from whom to buy, and what price they are willing to pay.
A consumer includes individuals, businesses, and
government.
What is the role of producers in a market economy?
Producers are individuals and organizations that
determine what products and services will be available for sale.
Producers determine what products and services will
be available, what needs and wants they will satisfy, and the prices they want to receive.
The market economy is based on the principles
of supply and demand
.
What is demand?
the quantity of goods or services that
consumers are willing and able to buy.
Examples: High demand for a new gaming console or electronic item causes the price to rise.
Last year’s fashions go “out of style” and drop in price occurred.
What are some examples of consumer
demand?
What is supply?
refers to the quantity of goods or services that businesses are willing and able to provide.
Supply Examples: Many companies are creating an mp3 player, therefore the price drops.
Only a few companies started selling tablets, such as the iPad, so the price was high when they were introduced to the public.
What are some examples of how producers establish
supply?
Producers establish the quantity of goods or services that will be produced to meet the demands of consumers.
SUPPLY AND DEMAND GRAPHS
Market (equilibrium) price is the point where supply and demand are equal.
