Unit 1: Going Into Business For Yourself

1. Unit 1: Going Into Business For Yourself Chapter 1: What is Entrepreneurship?

2. The Main Idea • Entrepreneurship is the primary catalyst for economic growth. To be successful requires an understanding of how the economy works.

3. Small Business and Entrepreneurship • Entrepreneur: individual who undertakes the creation, organization and ownership of a business. He or she also accepts the risks and responsibilities • Venture: A new business undertaking that involves risk • Entrepreneurship: the process of recognizing an opportunity, testing it on the market, and gathering the necessary resources to go into business • More than 90% of all businesses today are considered small businesses, with 62% being home-based.

4. Economic Systems • 4 Fundamental Questions: • What goods and services should be produced? • What quantity of goods and services should be produced? • How should goods and services be produced? • For whom should goods and services be produced?

5. Free Enterprise System • People have an important right to make economic choices ( the U.S) • People can choose what products to buy • People can choose to own private property • People are free to start a legal business and compete with other businesses • Also known as Capitalism or a Market Economy

6. The Profit Motive: making a profit is a primary incentive of free enterprise.Profit is money left over after all expenses have been paid.

8. Competition • Competition is good for consumers because it provides choices, forces improved quality and efficiency and leads to a surplus, which brings prices down.

9. Monopoly a market structure in which a product has only one seller who has total control over supply and most prices Oligopoly A market structure in which there are just a few competing firms Market Structures

10. Basic Economic Concepts • Goods and Services: Goods are tangible while services are intangible • Scarcity: occurs when demand exceeds supply

11. Ownership • Ownership is powerful • You can open any business you create • You can keep all the profits • It is your choice • You can sell “shares” • You can donate

13. Supply and Demand“How Free Enterprise Works”

14. Supply (S): quantities available to consumers at various prices If everything else remains the same, businesses will supply more at higher prices than at lower ones As P increases, QS increases Demand (D):quantities that consumers would be willing to buy at various prices. If everything else remains the same, people will demand more at lower prices than higher ones As P increases, QD decreases Laws of Supply and Demandgenerally determine the price of a product

15. Supply graph example

16. Demand graph example

17. Market behavior • What happens to the price of air conditioners in the summer? fall? • When are bathing suits most expensive? Why?

18. EquilibriumAlso known as Market Clearing Price.Occurs where the D and S curves meet

19. Competition • Keeps prices down and quality high • The consumer benefits from competition. How? • The opposite is called a monopoly

20. Summary • Overall, use Supply and Demand as guides • If D decreases, the market may be telling you to change your product or lower Price • If Supply increases, prices may fall