1. Introduction to Entrepreneurship
How Economic Decisions are Made

2. Entrepreneurship
Different economic systems exist throughout the world. Yet all economic systems must answer three basic questions:
What goods and services will be produced?
How will the goods and services be produced?
For whom will the goods and services be produced?
(whose needs and wants will be satisfied?)

3. Entrepreneurship Four basic types of Economic Systems COMMAND Economy
MARKET Economy
TRADITIONAL Economy
MIXED Economy

4. Entrepreneurship COMMAND Economy
The government determines what, how and for whom products and services are produced.

5. Entrepreneurship THRIVES in a MARKET economy.
Individuals and businesses decide what, how and for whom goods and services are produced.
Entrepreneurship THRIVES in a MARKET economy.

6. No existing market. Use what is made and trade what’s left over.
Entrepreneurship
TRADITIONAL Economy
Goods and services are produced the way they always have been produced.
No existing market. Use what is made and trade what’s left over.

7. Entrepreneurship MIXED Economy
When elements of the command and market economies are combined
Typically occurs when a country is moving away from a command economy

8. Entrepreneurship
The U.S. Economic System
MARKET Economy
Capitalism
Free Enterprise

9. U.S. economic system is based on four basic principles
Entrepreneurship
U.S. economic system is based on four basic principles
Private Property
Freedom of Choice
Profit
Competition

10. Entrepreneurship Private Property Freedom of Choice
Freedom to own anything you want. You can own, use and dispose of things of value
Freedom of Choice
Freedom to make decisions independently and must accept the consequences of those decisions

11. Entrepreneurship Profit Competition
The difference between revenues earned by a business and the costs of operating the business. No business is guaranteed a profit.
Competition
The rivalry among businesses to sell their goods and services. Consumers choose products and services based on the value they think they will receive.

12. Entrepreneurship Economic decision making Scarcity Opportunity Cost
The process of choosing which needs and wants, among several, you will satisfy using the resources you have. TWO factors commonly enter into economic decision making.
Scarcity
Occurs when people’s wants and needs are unlimited, but the resources used to produce the goods and services to meet those wants and needs are limited.
Opportunity Cost
The value of the next-best alternative…the thing you pass up

13. Entrepreneurship 4 Functions of Business Production Marketing
Management
Finance

14. Entrepreneurship Production
Creation or acquisition of products or services that you make available for sale
Marketing
The combination of product, distribution, price and promotion (marketing mix) which attracts customers to the goods and services you make available for sale

15. Entrepreneurship Management
Setting goals, determining how goals can be met, deciding how to respond to the actions of competitors, solving problems, overseeing the work of employees and evaluating the activities of the business
Finance
Determining the amount of capital needed to operate the business, how that capital will be obtained and managing the financial records of the business