Chapter 1 Wants and Needs

Wants & Needs  What is the difference b/w what you want and what you need.  You make business decision ever day Buying snack, buying lunch, going to a movie  All of these transactions are a business decision

“Wants”  Wants are anything you wish you could have.  Each person has wants and each person’s are different Car vs. Tuck, mountain bike vs. off-road bike,  A group of people may also share the same wants. Families wanting new car, business new computer system  All these types of wants are considered private.

“Wants”  Some wants are widely shared by many people  These wants are no longer considered private but public wants Things like highways, drinking water, and education  Federal, State, and Local governments satisfy public wants  The role of wants drive our economy

“Wants”  Businesses take these wants and provide either a product or a service

“Needs”  Necessary wants are what is known as Needs Food, Shelter, Clothing are basic needs  Many business respond to consumer needs by providing goods and services at reasonable prices

Goods  Goods can by physically weighed or measured  Bicycles and skates are goods, as are groceries and telephones  Goods satisfy your wants and needs for material things that you can see or touch

Services  Services are tasks that people or machines perform  Services also satisfy some of your wants for things you cannot see or touch. Mechanics, Lawn care, cutting hair

Unlimited Wants, Limited Resources  Most people have unlimited wants for goods and services. The more money you make the more you want  However few have enough resources to satisfy all of their wants

Resources  Resources are anything that people can use to make or obtain what they need or want Exp: Fuel, timber, labor, and money  The problem of unlimited wants and limited resources affects individuals, companies, and nations.  Resources limit the number or wants people can satisfy. Example you want a new pair of jeans and a new camera but only have money for one of them

Resources  Businesses and governments are influenced by the same problem  They lack the resources to do all the things that they want to do.

Resources  People make the most of their resources by making the right choices about what to buy.  The decision-making process is a step by step method to carefully consider alternatives that result in better choices.

Decision-making Process  Step 1: Identify the problem Occurs daily or comes up only a few times  Step 2: List the alternatives Take the time to com up with a good range of alternatives  Step 3: Determine the pros and cons  Step 4: Make the best decision Rank the alternatives according to the pros and cons  Step 5: Evaluate your decision Ask yourself if you made the correct decision

Decision-making Process  You may not use all of the steps of the process every time you buy something.  Example buying orange juice or a new car.

Business  Whether you are deciding what movie to see or what bike to buy your wants and needs are usually satisfied by businesses  A business is any activity that seeks profit by providing goods or services to others.  Business provide you with necessities such as food, clothing, housing, and medical  They can also provide non-necessities

Business  Businesses also provide people with the opportunity to become wealthy Exp: Sam Walton opened Wal-Mart in 1962 in Arkansas and now sells about $200 billion worth of goods

Business Activities  Business will market the products or service by deciding where to sell it and how to advertise it.  But first they have test to make sure enough people will buy the product or service. Exp: taste tests  A business will go through a sequence of activities when developing a new or improved product or service

Business Activities  Determine opportunities for products or services  Evaluate the demand for the product or service. Will enough people buy or use it for that price  Obtain funding A business will need both start up money and operating capital

Business Activities  Set up and manages all factors for producing the good or service Equipment, buildings, and raw materials  Produces the good or service  Markets to ensure consumers know of the good or service  Keep records to satisfy government requirements, improve production and sales

Business Motivations  Why would a business or person supply the good or service  Profit is the amount of money left over after a business has paid for the cost of producing its goods and services.  Profit is the motivation of taking the risk to start a business.  Without it the business can not survive.

Business Motivations  Businesses are profitable when sales are high and costs are kept low.  When consumer’s wants and needs change then the businesses are motivated to change along with them.  Companies are also motivated by competition.  Competition is the contest b/w businesses to win customers. Exp: Verizon, Motorola, Sprint

Businesses & You  Business make decisions that impact you  They decided what products and services to produce  However you also affect businesses  You decided what kind or products and services you want  This is how businesses know what products or services to produce

Consumer  A consumer is a person who selects purchases, uses, or disposes of goods or services  Businesses are aware of you changing needs and wants  They have to keep marketing to be able to understand and change anything to keep up with these needs and wants

You as a Wage Earner  Businesses also affect you as a wage earner  Businesses have to pay someone to produce the products and services  This is where they hire individuals to perform the work  How do businesses know how many to hire?

Homework  Homework due on Thur.  Pg  #1-24