1. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 1 SLIDE 1 1-1 1-1Satisfying Needs and Wants 1-2 1-2Economic Choices 1-3 1-3Economic Systems 1-4 1-4Supply and Demand 1 C H A P T E R Economic Decisions and Systems

2. © 2012 Cengage Learning. All Rights Reserved. SLIDE 2 1-1Satisfying Needs and Wants Goal 1Explain the difference between needs and wants. Goal 2Distinguish between goods and services. Goal 3Describe the types of economic resources.

3. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 1 SLIDE 3 KEY TERMS ●needs ●wants ●goods ●services ●economic resources

4. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 1 SLIDE 4 NEEDS AND WANTS ●Needs are essential ●Wants add to the quality of life ●Needs and wants are unlimited

5. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 1 SLIDE 5 Checkpoint ●What is the difference between a need and a want? ●Needs are those things required to live, such as food, clothing, and shelter. ●Wants are things that add comfort and pleasure to our lives such as television, music CDs, and movies.

6. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 1 SLIDE 6 Checkpoint ●How do people satisfy their wants and needs? ●People satisfy their wants and needs by purchasing and consuming goods and services.

7. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 1 SLIDE 7 ECONOMIC RESOURCES ●Natural resources ●Human resources ●Capital resources ●Resources are limited

8. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 1 SLIDE 8 Checkpoint ●What are the three types of economic resources? Give an example of each type. ●Natural: water, land, trees, animals, and minerals. ●Human: labor (people who run farms and factories, transport goods, provide services, or manage businesses). ●Capital: money, land, buildings, tools, and equipment.

9. © 2012 Cengage Learning. All Rights Reserved. SLIDE 9 1-2Economic Choices Goal 1Understand the basic economic problem. Goal 2Explain the steps in the decision- making process.

10. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 1 SLIDE 10 KEY TERMS ●scarcity ●economic decision-making ●trade-off ●opportunity cost

11. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 1 SLIDE 11 THE BASIC ECONOMIC PROBLEM ●Choices ●Trade-offs and opportunity costs

12. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 1 SLIDE 12 Checkpoint ●What is opportunity cost? ●Opportunity cost is the value of the next best alternative that you don’t choose. ●It is what you are willing to give up in order to have your first choice.

13. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 1 SLIDE 13 THE DECISION-MAKING PROCESS 1.Define the problem. 2.Identify the choices. 3.Evaluate the advantages and disadvantages of each choice. 4.Choose one. 5.Act on your choice. 6.Review your decision.

14. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 1 SLIDE 14 Checkpoint ●What are the six steps in the decision-making process? ●Define the problem. ●Identify the choices. ●Evaluate advantages and disadvantages of each alternative. ●Choose one. ●Act on your choice. ●Review your decision.

15. © 2012 Cengage Learning. All Rights Reserved. SLIDE 15 1-3Economic Systems Goal 1Identify the three economic questions. Goal 2Differentiate among the main types of economic systems. Goal 3Describe the economic system of the United States.

16. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 1 SLIDE 16 KEY TERMS ●economic system ●command economy(communism)- an economy in which resources are owned and controlled by the government ●market economy-(capitalism) an economy where the resources are owned and controlled by the people ●traditional economy-an economy in which goods and services are produced the way they have always been produced ●mixed economy- (socialism)an economy that combines the elements of a market and command economy

17. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 1 SLIDE 17 THE THREE ECONOMIC QUESTIONS ●What to produce? ●How to produce? ●What needs and wants to satisfy?

18. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 1 SLIDE 18 Checkpoint ●What are the three economic questions? ●What goods and services will be produced? ●How will the goods and services be produced? ●What needs and wants will be satisfied with the goods and services?

19. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 1 SLIDE 19 TYPES OF ECONOMIC SYSTEMS ●Command economy ●Market economy ●Traditional economy ●Mixed economies

20. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 1 SLIDE 20 Checkpoint ●What are the main differences among the three economic systems? ●The main differences among the economic systems are found in the ways in which the three economic questions are answered.

21. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 1 SLIDE 21 Capitalism ●1. Advantages: economic system produces goods and services that people want/need and that bring a profit to sellers; freedom of choice; get more income for individual input in the market; competition keeps prices lower for consumers; government does not dictate for whom, what, or how to produce. ●2. Disadvantages: citizens who are productive are the only ones who are rewarded; wealth of the economy is not evenly distributed. ●3. Main Countries: United States, Japan, Canada, and Great Britain.

22. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 1 Traditionalism: ●1. Advantages: Everyone has a role in the economy and economic life is stable; community life continuous. ●2. Dis-advantages: Discourages new ideas and ways of doing things; Growth is limited, so this economy falls behind other kinds of economies. ●3. Main Countries who have Traditionalism style economies are societies living in the rain forests of Latin America, parts of Africa, and the Middle East. SLIDE 22

23. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 1 Communism ●1. Advantages: Can make a dramatic change in a short time on production of goods; each person is provided with a job with certain medical and social services. ●2. Disadvantages: Consumer goods/services rank low on the list of priorities for that country; therefore, fewer consumer wants are met. Next there is a lack of incentive to work hard. Finally, it limits an individual’s choice to make on their own economic decision. ●3. Main Countries: North Korea, China, and Cuba SLIDE 23

24. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 1 Socialism ●1. Advantages: Government and private business work together; individuals are provided with medical services, lifelong welfare services, and social security benefits for everyone. ●2. Disadvantages: Workers are taxed at an extremely high rate to pay for all the things government provides; high tax rate discourages private business; also the high tax rate lessens consumers’ spendable income ●3. Main Countries: Sweden and France SLIDE 24

25. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 1 SLIDE 25 Checkpoint ●Name the four principles of the U.S. economic system. ●Private property ●Freedom of choice ●Profit ●Competition

26. © 2012 Cengage Learning. All Rights Reserved. SLIDE 26 1-4Supply and Demand Goal 1Describe supply and demand orally and with graphs. Goal 2Discuss how supply and demand affect prices of products and services.

27. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 1 SLIDE 27 KEY TERMS ●consumer ●producers ●demand ●supply ●market price

28. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 1 SLIDE 28 PARTICIPATING IN A MARKET ECONOMY ●Consumers set demand ●Producers establish supply ●A graphic view

29. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 1 SLIDE 29 DEMAND AND SUPPLY The higher the demand the more the company can charge for the product. When demand falls, price follows.

30. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 1 SLIDE 30 Checkpoint ●How does the price of a product affect demand and supply? ●As prices decrease, the number of consumers willing and able to purchase the product (demand) will increase. ●As prices increase, businesses will be willing to supply larger quantities of the product.

31. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 1 SLIDE 31 DETERMINING PRICE ●Factors influencing demand ●Factors influencing supply

32. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 1 SLIDE 32 Checkpoint ●How is the market price for a product determined? ●Supply, demand, and competition determine the market price for a product or service. ●The market price is the point at which supply and demand are equal.