Introduction to Business © Thomson South-Western ChapterChapter Economic Decisions and Systems Satisfying Needs and Wants Economic Choices Economic Systems Supply and Demand 1

Introduction to Business © Thomson South-Western Chapter 1 Slide 2 LESSON 1-1 LESSON 1-1 Satisfying Needs and Wants Goals Explain the difference between needs and wants. Distinguish between goods and services. Describe the types of economic resources.

Introduction to Business © Thomson South-Western Chapter 1 Slide 3 Key Terms needs wants goods services economic resources

Introduction to Business © Thomson South-Western Chapter 1 Slide 4 NEEDS AND WANTS Needs are essential Wants add to the quality of life Needs and wants are unlimited

Introduction to Business © Thomson South-Western Chapter 1 Slide 5 >> C H E C K P O I N T What is the difference between a need and a want?

Introduction to Business © Thomson South-Western Chapter 1 Slide 6 GOODS AND SERVICES Goods and services for businesses and consumers The U.S. economy

Introduction to Business © Thomson South-Western Chapter 1 Slide 7 >> C H E C K P O I N T How do people satisfy their wants and needs?

Introduction to Business © Thomson South-Western Chapter 1 Slide 8 ECONOMIC RESOURCES Natural resources- raw materials Human resources- people producing goods and services Capital resources- products and money used in production Resources are limited

Introduction to Business © Thomson South-Western Chapter 1 Slide 9 >> C H E C K P O I N T What are the three types of economic resources? Give an example of each type of resource.

Introduction to Business © Thomson South-Western Chapter 1 Slide 10 LESSON 1-2 LESSON 1-2 Economic Choices Goals Understand the basic economic problem. Explain the steps in the decision- making process.

Introduction to Business © Thomson South-Western Chapter 1 Slide 11 Key Terms scarcity economic decision-making tradeoff opportunity cost

Introduction to Business © Thomson South-Western Chapter 1 Slide 12 THE BASIC ECONOMIC PROBLEM People/businesses have unlimited wants \ needs Economic resources are limited The mismatch is the economic problem Scarcity: not having enough resources to satisfy every need

Introduction to Business © Thomson South-Western Chapter 1 Slide 13 THE BASIC ECONOMIC PROBLEM What does the economic problem force? Businesses and people to make choices What is economic decision making? The process of choosing which wants will be satisfied

Introduction to Business © Thomson South-Western Chapter 1 Slide 14 THE BASIC ECONOMIC PROBLEM Tradeoff- when you give up something to have something else Opportunity cost- the value of the next best alternative that you did not choose

Introduction to Business © Thomson South-Western Chapter 1 Slide 15 >> C H E C K P O I N T What is opportunity cost?

Introduction to Business © Thomson South-Western Chapter 1 Slide 16 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.

Introduction to Business © Thomson South-Western Chapter 1 Slide 17 >> C H E C K P O I N T What are the six steps in the decision- making process?

Introduction to Business © Thomson South-Western Chapter 1 Slide 18 LESSON 1-3 LESSON 1-3 Economic Systems Goals Identify the three economic questions. Differentiate among the main types of economic systems. Describe the economic system of the United States.

Introduction to Business © Thomson South-Western Chapter 1 Slide 19 Key Terms economic system command economy market economy traditional economy mixed economy capitalism

Introduction to Business © Thomson South-Western Chapter 1 Slide 20 THE THREE ECONOMIC QUESTIONS What to produce? How to produce? What needs and wants to satisfy?

Introduction to Business © Thomson South-Western Chapter 1 Slide 21 >> C H E C K P O I N T What are the three economic questions?

Introduction to Business © Thomson South-Western Chapter 1 Slide 22 TYPES OF ECONOMIC SYSTEMS Command economy- resources are owned and controlled by the government Market economy- resources are owned and controlled by the people of the country

Introduction to Business © Thomson South-Western Chapter 1 Slide 23 TYPES OF ECONOMIC SYSTEMS Traditional economy- goods and services are produced the way it has always been done Mixed economies- combines elements of the command and market economy

Introduction to Business © Thomson South-Western Chapter 1 Slide 24 >> C H E C K P O I N T What are the main differences among the three economic systems?

Introduction to Business © Thomson South-Western Chapter 1 Slide 25 THE U.S. ECONOMIC SYSTEM Private property: you can own, use, dispose Freedom of choice: you can make decisions independently and must accept the consequences

Introduction to Business © Thomson South-Western Chapter 1 Slide 26 THE U.S. ECONOMIC SYSTEM Profit: the money left from sales after all costs Competition: the rivalry among businesses to sell goods and services

Introduction to Business © Thomson South-Western Chapter 1 Slide 27 >> C H E C K P O I N T Name the four principles of the U.S. economic system.

Introduction to Business © Thomson South-Western Chapter 1 Slide 28 LESSON 1-4 LESSON 1-4 Supply and Demand Goals Describe supply and demand orally and with graphs. Discuss how supply and demand affect prices of products and services.

Introduction to Business © Thomson South-Western Chapter 1 Slide 29 Key Terms consumer producers demand supply market price

Introduction to Business © Thomson South-Western Chapter 1 Slide 30 PARTICIPATING IN A MARKET ECONOMY Consumers set demand Producers establish supply A graphic view

Introduction to Business © Thomson South-Western Chapter 1 Slide 31 DEMAND AND SUPPLY

Introduction to Business © Thomson South-Western Chapter 1 Slide 32 >> C H E C K P O I N T How does the price of a product affect demand and supply?

Introduction to Business © Thomson South-Western Chapter 1 Slide 33 DETERMINING PRICE Factors influencing demand Factors influencing supply Determining market price

Introduction to Business © Thomson South-Western Chapter 1 Slide 34 MARKET PRICE

Introduction to Business © Thomson South-Western Chapter 1 Slide 35 >> C H E C K P O I N T How is the market price for a product determined?