Presentation on theme: "Chapter 2 Economic Resources and Systems"— Presentation transcript:
1 Chapter 2 Economic Resources and Systems Intro To Business
2 Economic Resources Making Economic Decisions Scarcity – The inability to satisfy all of everybody’s wants .Individuals, businesses, and countries face a lack of resourcesPrinciple of Scarcity – there are limited resources for satisfying unlimited wants and needs.Factors of ProductionAll economic resources necessary to produce a society’s goods and services2-1
3 Economic Resources Factors of Production Natural Resources Raw Materials from nature that are used to produce goodsTrees, water, grains, cattle, coalRenewable Resources- can be reproducedWheat and cattleNon Renewable Resources- LimitedEx. Coal, iron, oilLabor ResourcesPeople who make the goods and services for which they are paid.Labor can be skilled or unskilled, physical or intellectual.
4 Economic Resources Capital Resources Entrepreneurial Resources Things used to produce goods and services (Capital Goods)Tractor, Delivery Truck, Computers, Medical SuppliesEntrepreneurial ResourcesIndividuals who start and direct businesses to produce goods and services to satisfy needs and wantsUsed by people who recognize opportunities and start businessesEntrepreneur – An individual who undertakes the creation, organization, and ownership of a businessEntrepreneurship- The process of recognizing a business opportunity, testing the market and gathering the resources necessary to start and run a business.
5 Questions Why do all nations face the problem of scarcity? Identify one similarity and one difference between labor and entrepreneurial resources?Describe the four factors of production
6 Economic SystemsEconomics – The study of how individuals and groups of people strive to satisfy their needs and wants by making choicesBasic Economic QuestionsWhat should be produced?Deciding to use a resource for one purpose means giving up the opportunity to use it for something else.This is the opportunity cost.How should it be produced?Methods and labor used as well as the quality of the items produced.Who should share in what is produced?In most societies people can have as many goods and services as they can afford to buyThe amount of income they receive determines how many goods and services they can have.2-2
7 Different Types of Economies Economic SystemThe methods societies use to distribute resources.Command EconomyEconomic system in which a central authority makes the key economic decisionsThe government dictates what will be produced, how it will be produced, and who will get the goods.Higher skilled workers earn the same as low-skilled workersSocialism – Moderate Command EconomyThe state owns the major ResourcesMixed EconomyAn economy that contains both private and public enterprisesCombines elements of both capitalism and socialism.
8 Different Types of Economies Market EconomyEconomic system where economic decisions are made in the marketplace.Marketplace – Where buyers and sellers meet to exchange goods and services .Also called Private enterprise system, free enterprise system, or capitalism.
9 Different Types of Economies Market Economy continued:Relationship between Price, Supply and DemandPrice – Amount of money given or asked for when goods and services are bought and soldSupply – Amount of goods and services that producers provide at a various priceDemand – Amount or quantity of goods and services that consumers are willing to buy at various pricesThe higher the price, the less consumers will buy. The lower the price, the more the consumers will buy.Equilibrium Price – Is the point at which the quantity demanded and the quantity supplied meet. At any other price you would either have a surplus or shortage
11 Demand and the Price Effect Price Elasticity of Demand- is a measurement of the impact of the price effect. It indicates a buyer’s eagerness to buy a good or service.Elastic vs. Inelastic DemandD2D1PriceQuantity
12 Demand and the Price Effect Factors that Affect the Elasticity of Demand: - Availability of Substitutes - Percentage of Budget - TimeElastic DemandInelastic DemandMany SubstitutesFew SubstitutesExpensive(require High % of Budget)InexpensiveTime to Plan or AdjustMust Buy Now
13 Questions How does a market system decide what will be produced? In a market system, what determines how many goods and services an individual can buy?Some nations can produce more goods with fewer workers than other countries that have more workers. How can that be true?