Presentation on theme: "Introduction to Business Introduction to Business Economic Resources and Systems."— Presentation transcript:
Introduction to Business Introduction to Business Economic Resources and Systems
Making Economic Decisions Just as consumers have to deal with shortages of resources, so do societies ◦Resources are the items that go into making goods and services ◦Lack of resources is known as scarcity ◦Scarcity means there are limited resources for satisfying unlimited wants and needs
Factors of Production Definition ◦All the economic resources necessary to produce a society’s goods and services Four factors of production: ◦Natural resources ◦Labor resources ◦Capital resources ◦Entrepreneurial resources
Natural Resources What are natural resources? ◦Raw materials that are used to produce goods Trees, water, grain, oil, coal Why are natural resources important? ◦Economy of many countries is primarily based on natural resources Renewable ◦Wheat and cattle Non-renewable ◦Coal, oil, iron
Labor and Capital Resources Labor resources are people who make the goods and services for which they are paid a salary. ◦Skilled or unskilled ◦Physical or intellectual Capital resources are things used to produce goods and services ◦Buildings, materials, equipment How are capital resources different from capital?
Entrepreneurial Resources Are used by people who recognize opportunities and start businesses Entrepreneurship is the process of recognizing a business opportunity, testing it in the market, and gathering the resources necessary to start and run a business Entrepreneurs are individuals who undertake the creation, organization, and ownership of a business ◦Accepts the risks and responsibilities of business ownership to gain profits and satisfaction
Economic Systems Basic questions??? ◦What is economics? The study of how individuals and groups of individuals strive to satisfy their needs and wants by making choices All societies have to make choices to deal with forms of scarcity. ◦ What should be produced? ◦ How should it be produced? ◦ Who should share in what is produced?
Different Types of Economies Economic Systems – ◦Methods societies use to distribute resources ◦Two basic types: 1) market 2) command
Market Economy Definition ◦An economic system in which economic systems are made in the marketplace ◦What is a marketplace? Where buyers and sellers meet to exchange goods and services, usually for money Also known as private enterprise system, free enterprise system, or capitalism Resources are privately owned Owners decide how businesses will be run, what to produce and sell, and what prices to charge Consumers choose their occupations and decide here to live, where to shop, and what to buy
Command Economy Definition ◦An economic system in which a central authority makes the key economic decisions. The government dictates what will be produced and who will get the goods Goods that are not considered necessities are often unavailable Prices are controlled by the state (or government)
For Discussion How does a market economy decide what will be produced? What are some the freedoms you enjoy by living as a citizen in a market economy?
Homework – Due Friday, September 18, 2009 Web Research ◦Research a country that has moved from a command economy to a market economy and write a paper that includes the following: The transitional process from command to market economy The conditions that led to the move The rights and responsibilities of businesses, consumers, and the government before and after the switch List natural resources, labor resources, and capital resources that are found in the country