Presentation on theme: "Introduction to Business"— Presentation transcript:
1 Introduction to Business Chapter 1Economic Decisions and SystemsLesson Plan, Day 1
2 Warm-Up Answer the following in complete sentences. Is there a difference between needs and wants? Explain your answer.
3 Needs and Wants Need: things you cannot live without ExamplesWater, food, shelter, clothingWants: things you would like to have but can live withoutThey add comfort andPleasure to life
4 Goods and Services Goods Services Things you can see and touch Examples: computers, food, clothesServicesWhen someone does something for someoneExamples: hair care, dental care, doctor visits
5 Economic ResourcesThe means through which goods and services are produced
6 Warm-UpWhen 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.
7 Natural Resources Raw materials supplied by nature Examples: lumber, coal, oil, water, animals, crops
8 Human Resources People producing the goods and services Examples: farmers, factory workers, managers, accountants, entrepreneurs
9 Capital ResourcesThe products and money used in the production of goods and servicesExamples: money, tools, equipmentNOTE: Economic Resources are Limited
10 The Basic Economic Problem ScarcityNot having enough resources to satisfy every need
11 Decision Making Tradeoff When you give up something to have something else
12 Opportunity CostDefinition: the value of your next best alternative that you did not chooseWhat did you give up or not have when making a decision to buy something or obtain a goal?
13 Decision Making Process Specify – Determine your goal. What is your need/wantSearch – Gather informationSift – Look at all options and opportunity costsSelect – Make a choice and act on itStudy – Evaluate the result
14 Warm-upIdentify the possible opportunity cost for each of the following.Trying out for an athletic teamAccepting a part-time jobStudying for an important examSaving money to buy a used carObtaining a loan to start a business
15 Economic Systems The Three Economic Questions What to produce? Depends on resources, climate, and educationHow to produce?Skilled/unskilled labor; technology availableWhat needs and wants to satisfy?What is most critical
16 Types of EconomiesCommand Economy – Government owns most of the resources and make most of the economic decisions.
17 Types of EconomiesMarket Economy: People rather than the government own the resources and run the business.The three economic questions are answered by individuals through buying and selling of goods in the marketplace. The marketplace is anywhere goods and services are exchanged.Consumers and businesses make decisions based on their own self interests – consumers send messages to producers by what they buy.
18 Types of EconomiesTraditional Economy – Goods and services are produced the same way for generationsCountries with traditional economies do not participate in the global economyDoes our society have any elements of a traditional economy?Again – who decides what is produced? Children are taught to use the same methods to make the same goods their ancestors produced. They often usethe natural resources readily available to them and will consume most of what they produce and sell and trade the rest.Another example of traditional economy in our society today is the Amish.
19 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)
20 The U.S. Economic System Capitalism Private ownership of resources by individuals not governmentFree to decide what to produce and buy
21 Warm-UpWhat are some disadvantages of living in a market economy?
22 Four Principles of the U.S. Economy Private PropertyIndividuals can own, use, or dispose of things of valueFreedom of ChoiceMake decisions independently and must accept consequences of those decisionsAs long as it does not violate the law, you can own anything you want and decide what to do with itAs a business owner you can decide what and where to sell and as a consumer you can decide what and where to buy products/services. Only when individual decisions harm others will the government regulate freedom of choice.
23 Four Principles of the U.S. Economy ProfitFormula: Price – Cost = ProfitPrice you sell the product – amount producer spends to make product = left over profitMaking money (Profit) is the heart of the private enterprise systemAlthough profit is not the only reason people go into business, but it is very difficult to continue a business if you are not making a profitAsk for examples of competition
24 Competition Contest among sellers to win customers. How does competition affect consumers?Better customer serviceGood quality productsFair prices
25 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.
26 Supply and Demand Consumers Producers anyone who buys or uses products.ProducersIndividuals/organizations that determine what products/services will be available for sale
27 Demand Quantity of goods that consumers are willing and able to buy Law of DemandAs prices go up, demand goes downExample: of a cheeseburger cost $1 each we might buy more than if they are $10 each
28 Demand Curve for Movies Price$10.509.007.506.004.503.001.501,000Quantity2,0003,0004,0005,0006,0007,000
29 SupplyQuantity of products that Producers are willing and able to make available for saleLaw of SupplyAs prices go up, supply goes upExample: if you are a supplier of computers you might make more available at $800 than at $200
30 Supply Curve for Watches Price$10590756045301510,000Quantity20,00030,00040,00050,00060,00070,00080,000
31 Market PricePoint at which supply and demand are equal.
32 Market Price for Notebook Computers $2,1001,8001,5001,200900600300100Quantity200400500700800DemandSupply
33 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.
34 Warm-Up Explain the following terms: Freedom of choice Capitalism Right to private property