Transcript Introduction to Business - Rantoul Township High School
Introduction to Business
Chapter 1 Economic Decisions and Systems
Warm-Up
• Answer the following in complete sentences.
– Is there a difference between needs and wants? Explain your answer.
Needs and Wants
•
Need
: things you cannot live without – Examples • Water, food, shelter, clothing
Wants
: things you would like to have but can live without They add comfort and Pleasure to life
Goods and Services
• Goods – Things you can see and touch • Examples: computers, food, clothes • Services – When someone does something for someone • Examples: hair care, dental care, doctor visits
Economic Resources
•
The means through which goods and services are produced
Warm-Up
• When Campbell’s Soup makes it’s Chicken Noodle Soup, what resources to they use to make the soup? Be specific and list all the resources you can think of.
Natural Resources
• Raw materials supplied by nature – Examples: lumber, coal, oil, water, animals, crops
Human Resources
• People producing the goods and services – Examples: farmers, factory workers, managers, accountants, entrepreneurs
Capital Resources
• The products and money used in the production of goods and services – Examples: money, tools, equipment • NOTE: Economic Resources are Limited
The Basic Economic Problem
• Scarcity – Not having enough resources to satisfy every need
Decision Making
•
Tradeoff
– When you give up something to have something else
Opportunity Cost
Definition:
the value of your next best alternative that you did not choose What did you give up or not have when making a decision to buy something or obtain a goal?
Decision Making Process
• • • • •
Specify
– Determine your goal. What is your need/want
Search
– Gather information
Sift
– Look at all options and opportunity costs
Select
– Make a choice and act on it
Study
– Evaluate the result
Warm-up
• Identify the possible opportunity cost for each of the following.
– Trying out for an athletic team – Accepting a part-time job – Studying for an important exam – Saving money to buy a used car – Obtaining a loan to start a business
Economic Systems
The Three Economic Questions
1. What to produce?
• Depends on resources, climate, and education 2. How to produce?
• Skilled/unskilled labor; technology available 3. What needs and wants to satisfy?
• What is most critical
Types of Economies
•
Command Economy
– Government owns most of the resources and make most of the economic decisions.
Types of Economies
•
Market Economy
: People rather than the government own the resources and run the business.
Types of Economies
•
Traditional Economy
– Goods and services are produced the same way for generations – Countries with traditional economies do not participate in the global economy Does our society have any elements of a traditional economy?
Mixed Economy
• A combination of a market economy and a command economy.
– U.S. has a mixed economy (the dominate economy is a market economy)
The U.S. Economic System
• Capitalism – Private ownership of resources by individuals not government • Free to decide what to produce and buy
Warm-Up
• What are some disadvantages of living in a market economy?
Four Principles of the U.S. Economy • Private Property – Individuals can own, use, or dispose of things of value • Freedom of Choice – Make decisions independently and must accept consequences of those decisions
Four Principles of the U.S. Economy • Profit – Formula: Price – Cost = Profit • Price you sell the product – amount producer spends to make product = left over profit – Making money (Profit) is the heart of the private enterprise system
Competition
• Contest among sellers to win customers.
How does competition affect consumers?
– Better customer service – Good quality products – Fair prices
Warm-Up
• What are the 5 steps in the decision making process?
• List the three components of economic resources and give an example of each.
Supply and Demand
• Consumers – anyone who buys or uses products.
• Producers – Individuals/organizations that determine what products/services will be available for sale
Demand
• Quantity of goods that consumers are willing and able to buy – Law of Demand • As prices go up, demand goes down – Example: of a cheeseburger cost $1 each we might buy more than if they are $10 each
Price $10.50
9.00
7.50
6.00
4.50
3.00
1.50
Demand Curve for Movies
1,000 Quantity 2,000 3,000 4,000 5,000 6,000 7,000
Supply
• Quantity of products that Producers are willing and able to make available for sale – Law of Supply • As prices go up, supply goes up • Example: if you are a supplier of computers you might make more available at $800 than at $200
Supply Curve for Watches
Price $105 90 75 60 45 30 15 10,000 Quantity 20,000 30,000 40,000 50,000 60,000 70,000 80,000
Market Price
• Point at which supply and demand are equal.
Price $2,100 1,800 1,500 1,200 900 600 300
Market Price for Notebook Computers
Demand Supply 100 Quantity 200 300 400 500 600 700 800
Warm-up
• List the three economic resources and give an example of each.
• List the 5 decision making steps and give an example of each.
Warm-Up
• Explain the following terms: – Freedom of choice – Capitalism – Right to private property