1. ENTREPRENEURS IN A MARKET ECONOMY
Entrepreneurship
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ENTREPRENEURS IN A MARKET ECONOMY
3.1 What Is an Economy?
3.2 The Concept of Cost
3.3 Government in a Market Economy
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2. Lesson 3.1 WHAT IS AN ECONOMY?
Entrepreneurship
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Lesson 3.1 WHAT IS AN ECONOMY?
GOALS
Describe market and command economies.
Define the concept of supply and demand.
Explain the effects of market structure on price.
Describe the functions of business in a market economy.
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3. Market and Command Economies
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Market and Command Economies
Different countries have different economic systems
These systems affect how an item is produced, how it is distributed, and the demand for an item
An economic system even determines whether an item is available at all

4. Entrepreneurship
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SCARCITY
Scarcity occurs when people’s needs and wants are unlimited and the resources to produce the goods and services to meet those needs and wants are limited.
Scarcity occurs in every economy.
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5. Entrepreneurship
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COMMAND ECONOMY
In a command economy, the government determines what, how, and for whom products and services are produced.
Very little choice for consumers
Individuals not always able to obtain what they want
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6. Entrepreneurship
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MARKET ECONOMY
In a market economy, individuals decide what, how, and for whom goods and services are produced.
They are about personal choice
If a good sells it will remain on the market
If a good does not sell it will no longer be produced
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PRODUCTIVITY
The level of output that an industry or company gets from each worker or each unit of input into its products and services is called productivity.
In order for the productivity of a company to increase, a new product must be produced or a current product must be produced better or more cheaply than the competition
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SUPPLY
Supply is how much of a good or service a producer is willing to produce at different prices.
Suppliers are willing to supply more of a product or service at a higher price.
Supply Curve
$50 40 30 20 10
Price
Quantity
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9. Entrepreneurship
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DEMAND
Demand is an individual’s need or desire for a product or service at a given price.
Individuals are willing to consume more of a product or service at a lower price.
Demand Curve
$50 40 30 20 10
Price
Quantity
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10. WHEN SUPPLY AND DEMAND MEET
Entrepreneurship
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WHEN SUPPLY AND DEMAND MEET
Supply and Demand Curves
The point at which the supply and demand curves meet is what is known as the equilibrium price and quantity.
This is the price at which supply equals demand.
Equilibrium Price
$50 40 30 20 10
Price
Quantity
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11. MARKET STRUCTURE AND PRICES
Entrepreneurship
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MARKET STRUCTURE AND PRICES
When a company controls all of a market, it has a monopoly.
A company that has a monopoly is able to charge more than a company that has to compete with other businesses
With a monopoly consumers have no where else to go, and they will continue to pay the high prices of the product or service that they need.
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Business Activities
In a market economy, a business is free to produce and offer to consumer any legal product or service
A knowledge of business activities will help entrepreneurs satisfy customers and make a profit
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13. BUSINESS ACTIVITIES IN A MARKET ECONOMY
Entrepreneurship
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BUSINESS ACTIVITIES IN A MARKET ECONOMY
Production
Creating or obtaining products or services for sale
Marketing
Product
Distribution
Price
Promotion
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14. Business Activities Management Finance
Entrepreneurship
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Business Activities
Management
Setting goals, determining how goals can be met, and how to respond to the actions of competitors is the role of management
Finance
Planning and managing financial records and information related to a businesses’ finance.
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15. Lesson 3.2 THE CONCEPT OF COST
Entrepreneurship
6/10/2018
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Lesson 3.2 THE CONCEPT OF COST
GOALS
Identify various types of costs.
Discover how different types of costs affect the prices entrepreneurs charge.
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16. FIXED AND VARIABLE COSTS
Entrepreneurship
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FIXED AND VARIABLE COSTS
Fixed costs are costs that must be paid regardless of how much of a good or service is produced.
Fixed costs are also called sunk costs.
Variable costs are costs that go up and down depending on the quantity of the good or service produced.
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17. MARGINAL BENEFIT AND MARGINAL COST
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MARGINAL BENEFIT AND MARGINAL COST
Marginal benefit measures the advantages of producing one additional unit of a good or service.
Marginal cost measures the disadvantages of producing one additional unit of a good or service.
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OPPORTUNITY COST
Opportunity cost is the cost of choosing one opportunity or investment over another.
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19. Lesson 3.3 GOVERNMENT IN A MARKET ECONOMY
Entrepreneurship
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Lesson 3.3 GOVERNMENT IN A MARKET ECONOMY
GOALS
Explain the government’s effect on what is produced.
Recognize the different roles the government plays in a market economy.
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20. GOVERNMENT’S EFFECT ON WHAT IS PRODUCED
Entrepreneurship
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GOVERNMENT’S EFFECT ON WHAT IS PRODUCED
Purchases
Taxes
Subsidies
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21. ROLES OF THE GOVERNMENT
Entrepreneurship
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ROLES OF THE GOVERNMENT
Regulator
Inspection
Licenses
Provider of public good
Provider of social programs
Redistributors of income
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