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Introduction to Business and Economics

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1 Introduction to Business and Economics
BUSINESS CONCEPTS AND OPERATIONS (8) Summarize the foundational economic principles of supply and demand. Distinguish between an economic good and an economic service, and draw conclusions about how the law of supply and demand influences what goods and services businesses will produce using limited resources. Using a range of goods and services as evidence, write a brief informative text illustrating this relationship and the implications for consumers and the economy at large. (TN Reading 1, 2, 4; TN Writing 2, 4)

2 What does it mean to be in business?
Bellringer (You Do) What does it mean to be in business?

3 I CAN . . . Define business and its benefits
Describe the four functions of business

4 Impact of Business A business is a specific organization.
However, business is the term for all the activities involved in developing and exchanging products. Must be organized and focused on the customer Consumer market is comprised of customers who buy products for their own use. Business market consists of customers who buy products for use in a business.

5 Business Provides Products
Meet needs and satisfy wants Provide utility (characteristics of a product that satisfy wants and needs) OR usefulness

6 5 Types of Utility Form (when a business changes the form of a good or service to make it more useful) Place (when products are available at convenient places) Time (when products are made available at times that customers need and want them) Information (when facts and details about a product are made available) Possession (when it becomes easier for customers to acquire a product)

7 Apply Your Knowledge (You Do)
A major task of business is to provide utility. Explain how the five types of utility can be added to a common product, such as milk or gasoline. List each form of utility and write your explanation next to each.

8 Business Creates Markets
Anywhere buyers and sellers meet to buy and sell goods and services

9 Business Generates Economic Benefits (Gains that are measured in terms of money)
The main reason businesses operate is to earn a profit. (Difference between the income earned and expenses incurred by a business during a specific period of time.) Employment to earn wages (money earned in exchange for work) Determines standard of living (level of material comfort measured by the goods, services, and luxuries available.

10 Functions of Business Production Finance Marketing Management

11 Production Any activity related to making a product
Farming, mining, construction, and manufacturing, etc.

12 Finance All business activities that involve money
Receiving money from customers, paying money to suppliers, paying wages to employees, etc.

13 Marketing All activities that identify, anticipate, and satisfy customer demand while making a profit. Focus on customers

14 Management Process of controlling and making decisions about a business All activities required to plan, coordinate, and monitor a business Hiring and training employees

15 Check Your Understanding (We Do)
What is the difference between the consumer market and the business market? List the five types of utility provided by business. What is the main reason a business operates? What are three economic benefits generated by businesses in an economy? List the four functions of business.

16 Guess That Term! (They Do)
Business Product Good Service Customer Consumer Need

17 Guess That Term! (They Do)
Want Utility Market Profit Wages Standard of living

18 How do the principles of economics apply to business?
Bellringer How do the principles of economics apply to business?

19 I Can . . . Explain the importance of economics
Describe the four economic systems Discuss the impact of market forces on businesses

20 Economics A science that examines how goods and services are produced, sold, and used Involves how people, governments, and businesses make choices about using limited resources to satisfy unlimited wants Helps businesses make better plans and decisions

21 Economic Resources All are limited.
Factors of production are the economic resources a nation uses to make goods and supply services for its population. Land, labor, capital, and entrepreneurship

22 Word Studies Land Labor Capital Entrepreneurship

23 Factors of Production Land Soil Water Minerals Plants Animals Climate
Labor Agricultural workers Construction workers Factory workers Miners Professionals Service workers Capital Tools Equipment Machinery Buildings Vehicles Transportation systems Utilities Entrepreneurship Business owners

24 Teamwork (They Do) Working as a team, select a product that uses multiple resources in its production. Describe how each factor of production was used to create the end product.

25 Economic Problem Making choices about using limited resources to satisfy unlimited wants Scarcity develops when demand is higher than the available resources. Scarcity forces choices to be made. Trade-off (when something is given up in order to gain something else) When this occurs, an opportunity cost is created. (value of the next best option that was not selected)

26 “Everybody got choices . . .”
When making economic decisions, a systematic decision-making process can help identify the best option. Process of choosing an option after evaluating the available information and weighing the costs and benefits of the alternatives.

27 Steps in the Decision-Making Process
Define the problem or challenge Research alternatives Chose the best alternative Implement the decision Evaluate the decision

28 Economic Systems An organized way in which a nation chooses to use its resources to create goods and services. What should we produce? How should we produce it? For whom should we produce it? Develops around the way it deals with scarcity.

29 Traditional Economy Economic decisions are based on a society’s values, culture, and customs. Existed early in human history, still found in underdeveloped nations Usually no manufacturing Most trade or barter

30 Command Economy (Centrally-Planned)
Government makes all the economic decisions for its citizens Found in communist and socialist societies Government owns and controls all factors of production North Korea, Cuba

31 Market Economy (free enterprise, private enterprise or consumer economy)
Individuals are free to make their own economic decisions Characteristics Private property Profit Economic freedom Voluntary exchange Competition

32 Fill in the blanks! (You Do)
Free Enterprise System _________________ __________________

33 The U.S. has maintained the largest market economy of the 20th and 21st centuries.
Capitalism is another name for the US economic system. Economic resources are privately owned by individuals rather than the government.

34 Mixed Economy Both the government and individuals make decisions about economic resources Many economies are mixed, having elements of both command and market. What does that look like? Provide an example.

35 Apply Your Knowledge (You Do)
Compare and contrast the types of economic systems: traditional, command, market economy, and mixed economy. How are these systems the same? How are they different? Summarize your findings. Use PowerPoint to create a Venn diagram or other graphic organizer to visually display the information. Print and submit.

36 Market Forces Economic factors that affect the price, demand, and availability of a good or service. In free enterprises, this results in the production of the best goods and services at the most attractive prices. Includes supply and demand, profit motive, and competition

37 Supply and Demand Critical because it determines the price of goods and services Supply (quantity of goods available for purchase) Demand (quantity of goods that consumers want to purchase)

38 The Law of Supply and Demand
The price of a product is determined by the relationship of the supply of a product and the demand for the product. Applies to a constant environment Higher demand results in higher prices Lower demand results in lower prices An increase in supply often lowers prices Decrease in supply usually increases prices The market price is determined at the point where supply equals demand for a product (equilibrium)

39 The Supply Curve Shows that producers are willing to supply a greater quantity of goods at higher prices.

40 The Demand Curve Shows that consumers are willing to buy fewer goods at higher prices Market price is the point at which the supply and demand are equal. Equilibrium is where the supply curve and demand curve intersect.

41 Label the Supply and Demand Curve (You Do)
Equilibrium Market Price

42 Supply and Demand Influences
Shortage Surplus Demand for a product becomes greater than the available supply Consumers compete to buy the available supply Forces the price up Demand for a product becomes less than the available supply Sellers compete to sell the available supply Forces price down Demand can also be influenced by changes in society.

43 Apply Your Knowledge (You Do)
Explain the basic principles of supply and demand. What effect do you think this principle has on human behavior? Give an example in which the principles of supply and demand result in positive behavior. Give an example in which behavior becomes negative. Prepare in Word. Print. Submit.

44 Profit Motive Even though many businesses are created because the owners are looking for personal satisfaction, independence, and other advantages, profit is the driving force.

45 Competition Action taken by two or more businesses attempting to attract the same customers Business must work to win each customer’s business because of the freedom of customers to choose the goods and services they buy.

46 Check Your Understanding
What is the basic economic problem? List the four factors of production a nation uses to make goods and supply services for its population? What are the four economic systems? What are market forces? Identify three market forces that impact business.

47 Internet Research (You Do)
Research the economic system of your assigned country. Using the Internet, visit and select the library tab. The World Factbook on the page provides information on countries of the world. Summarize the information that you find about the country you are assigned. How does the country you have compare with the United States? You will present your findings to the class via PowerPoint.

48 Circle Your Assigned Country
Russia Afghanistan Algeria Angola Argentina Australia Bangladesh Belgium Belize Canada Chile China Dominican Republic Egypt Greece Haiti Hong Kong Japan Libya New Zealand Nigeria Philippines Saudi Arabia Senegal Portugal Spain Sweden Taiwan Turkey Uganda Ukraine Venezuela Vietnam Yemen Zimbabwe United Kingdom Brazil Cambodia Bolivia Botswana Columbia Denmark Finland France German Gabon Gaza Strip Hungary Iraq Israel

49 Test Questions – Homework (You Do) Complete on Notebook Paper In Complete Sentences.
Differentiate between goods and services. What are the benefits created by business? Explain the five types of utility provided by business. How does business create economic benefits? Describe the four functions of business. Explain how economic resources determine what goods and services will be produced. Describe the factors of production. Summarize the characteristics of the private enterprise system. How does the law of supply and demand affect the market price of a product? Explain profit motive as a market force.

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