1. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ChapterChapter2 Entrepreneurs in a Market Economy 2.1 Entrepreneurs Satisfy Needs and Wants 2.2 How Economic Decisions are Made 2.3 What Affects Price?

2. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 2 Lesson 2.1 Entrepreneurs Satisfy Needs and Wants Goals Distinguish between needs and wants. Describe the types of economic resources. Explain the role of entrepreneurs in the U.S. economy.

3. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 3 Vocabulary needs wants economic resources

4. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 4 Is It a Need or a Want? needs things that are necessary for survival wants things you think you must have in order to be satisfied add comfort and pleasure to your life

5. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 5 The role of businesses is to produce and distribute goods and services that people need and want.

6. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 6 Needs Maslow’s hierarchy of needs states that: People’s basic psychological needs must be satisfied before they can focus on higher level needs.

7. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 7

8. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 8 are different for each person vary by situation needs

9. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 9 Wants economic wants a desire for material goods and services are the basis of an economy clothing housing cars noneconomic wants nonmaterial things sunshine fresh air happiness

10. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 10 Needs and Wants are Unlimited Needs and wants never end. One purchase often leads to another.

11. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 11 What is the difference between a need and a want?

12. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 12 Economic Resources economic resources the means through which goods and services are produced goods products you can see and touch services activities that are consumed as they are produced

13. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 13 Entrepreneurs use economic resources to create the goods and services consumers use.

14. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 14 Factors of Production natural resources raw materials supplied by nature human resources the people who create goods and services

15. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 15 when individual workers focus on single tasks each worker becomes more efficient and productive division of labor divides the production process into separate tasks workers specialize in specific tasks the group as a whole becomes more productive specialization

16. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 16 the assets used in the production of goods and services capital resources

17. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 17 Limited Resources Economic resources are limited. Individuals, businesses, and countries compete for resources. High demand for a limited resource drives up the price for the resource.

18. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Law of Diminishing Returns If one factor of production is increased while others stay the same, the resulting increase in output (product produced) will level off after some time and then will decline. Chapter 1 Slide 18

19. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 19 List the three types of economic resources and give an example of each.

20. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 20 Role of Entrepreneurs in the U.S. Economy Entrepreneurs play an important role in the U.S. economy. The development of small businesses helps to ensure a strong economic future.

21. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 21 Supply and Demand Entrepreneurs look for unmet needs to satisfy consumer needs and wants.

22. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 22 Capital Investment and Job Creation Entrepreneurs invest in their communities by contributing to the local economy providing jobs

23. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 23 Change Agents The creation of new products can: change the way people live alter the way people conduct business

24. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 24 What are some things entrepreneurs contribute to the U.S. economy?

25. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 25 Lesson 2.2 How Economic Decisions are Made Goals Compare and contrast different types of economic systems. Describe the characteristics of the U.S. economy. Explain how scarcity affects economic decisions. Explain how business functions are used to satisfy consumers.

26. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 26 Vocabulary capitalism profit economic decision making scarcity opportunity cost

27. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 27 Economic Systems Each economy must answer three basic questions regarding goods and services: Which ones will be produced? How will they be produced? Whose needs and wants will they satisfy?

28. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Command Economy Production decisions are made by the government. Few choices exist in the marketplace. Chapter 1 Slide 28

29. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Market Economy Production decisions are made by individuals and businesses. Entrepreneurship thrives in a market economy. Many choices exist in the marketplace. Chapter 1 Slide 29

30. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Traditional Economy Production occurs the way it has always occurred. Most production is consumed. Left over production is sold or traded. Chapter 1 Slide 30

31. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Mixed Economy These economies contain elements of command and market economies. The government is still involved in the marketplace. Chapter 1 Slide 31

32. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 32 a command economic system the government controls most of the resources and decisions communism

33. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 33 How does the type of economy affect the way the basic economic questions are answered?

34. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 34 The U.S. Economic System capitalism the private ownership of resources by individuals rather than by the government individual businesses and consumers make production decisions also called free enterprise

35. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 35 Private Property You may own whatever you want as long as you operate within the law. Freedom of Choice Government intervention occurs only when individual decisions will bring harm to others. The U.S. economic system of capitalism is based on four basic principles.

36. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 36 the difference between the revenues earned by a business and the costs of operating the business The opportunity to earn a profit is at the heart of the free-enterprise system. Competition the rivalry among businesses to sell their goods and services Profit

37. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 37 Describe the four basic principles of the U.S. economic system.

38. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 38 Economic Choices economic decision making the process of choosing which needs and wants, among several, you will satisfy using the resources you have

39. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Scarcity scarcity occurs when there are limited resources available to meet the unlimited needs and wants of consumers Scarcity forces you to make decisions about tradeoffs. Chapter 1 Slide 39

40. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Opportunity Cost opportunity cost the value of the next-best alternative (the one you pass up) Chapter 1 Slide 40

41. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 41 What factors affect economic choices?

42. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 42 Functions of Business Production The production function creates or obtains products or services for sale.

43. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 43 The goal of marketing is to attract as many consumers as possible. The marketing mix includes: product distribution price promotion Marketing

44. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 44 The duties of management include: setting goals deciding on responses to competition solving problems overseeing employees evaluating business activities Management

45. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 45 Financial duties include: determining the amount of capital needed determining how capital will be obtained managing the financial records of the business Finance

46. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 46 What are the functions of business?

47. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 47 Lesson 2.3 What Affects Price? Goals Recognize how supply and demand interact to determine price. Describe how costs of doing business affect the price of a good or service. Explain the effect of different market structures on price.

48. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 48 Vocabulary supply demand equilibrium price and quantity fixed costs variable costs marginal benefit marginal cost economies of scale

49. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 49 How Much Is Enough? supply how much of a good or service a producer is willing to produce at different prices demand the quantity of a good or service that consumers are willing to buy at a given price

50. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 50

51. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 51

52. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 52 when the demand of a product is affected by its price elastic demand when a change is price creates a change in demand inelastic demand when a change in price creates very little change in demand demand elasticity

53. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 53 When Supply and Demand Meet equilibrium price and quantity the point at which the supply and demand curves meet

54. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 54

55. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 55 What effect do supply and demand have price?

56. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 56 Costs of Doing Business fixed costs costs that must be paid regardless of how much of a good or service is produced variable costs costs that fluctuate depending on the quantity of the good or service produced

57. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 57 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 Fixed costs will be incurred regardless of the level of sales.

58. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 58 the cost advantages obtained due to expansion A lower average cost per unit is achieved through increased production because costs can be spread over an increased number of units. economies of scale

59. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 59 How do the costs of doing business affect prices?

60. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 60 Market Structure and Prices Perfect Competition Characteristics of perfect competition include: a very large number of businesses nearly identical products many well-informed buyers difficult to raise prices consumers have more control over the market businesses can leave or enter the market easily

61. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 61 Characteristics of monopolistic competition include: a large number of independent businesses goods and services that are somewhat different each business has a small share of the market prices are determined competitively differentiating products is important businesses can easily enter or leave the market Monopolistic Competition

62. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 62 Characteristics of an oligopoly include: a small number of businesses that gain the majority of total sales revenues the goods are similar and are close substitutes businesses can influence prices it is hard to enter the market Oligopoly

63. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 63 where there is only one provider of a good or service Because of a lack of competition, companies can charge whatever price they like. Barriers that make it difficult for new businesses to enter a market is a primary reason that monopolies exist. Monopoly

64. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 64 How does the market structure affect the price of a good or service?

65. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 65 PERFORMANCE COMPENTENCIES An understanding of the topic must be evident The topic should be presented in a logical manner All team members must contribute to the presentation Arguments should be persuasive and relevant to the topic Questions must be answered effectively

66. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 66 GIVE IT A TRY Working with team members, research the topic and prepare to present either an affirmative or negative argument. Draw to determine whether you will present an affirmative or negative argument. Finalize your preparations in five minutes.

67. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 67 You may use prepared notes during the preparation and presentation. In addition, each team member will be given two blank note cards for recording notes that can be used during the preparation and performance of the presentation. Information may be written on both sides of the note cards.

68. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 68 No reference materials, visual aids, or electronic devices may be brought to or used during the preparation or presentation.

69. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 Slide 69 Be prepared to answer questions after your presentation. Make the presentation to your class. The presentation should last no longer than five minutes.