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Entrepreneurs in a Market Economy

Learn how entrepreneurs play a vital role in the U.S. economy by creating goods and services that meet the needs and wants of consumers. Explore the different types of economic resources and understand how economic decisions are made. Discover how scarcity impacts decision-making and how entrepreneurs contribute to job creation and economic growth.

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Entrepreneurs in a Market Economy

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  1. 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. Lesson 2.1Entrepreneurs 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. Chapter 2

  3. Vocabulary • needs • wants • economic resources Chapter 2

  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 Chapter 2

  5. The role of businesses is to produce and distribute goods and services that people need and want. Chapter 2

  6. Needs • Maslow’s hierarchy of needs states that: • People’s basic physiological needs must be satisfied before they can focus on higher level needs. Chapter 2

  7. Chapter 2

  8. needs • are different for each person • vary by situation Chapter 2

  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 • friendship Chapter 2

  10. Needs and Wants are Unlimited • Needs and wants never end. • One purchase often leads to another. Chapter 2

  11. What is the difference between a need and a want? Chapter 1

  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 Chapter 2

  13. Entrepreneurs use economic resources to create the goods and services consumers use. Chapter 2

  14. 3 Factors of Production • natural resources • raw materials supplied by nature • human resources • the people who create goods and services Chapter 2

  15. specialization • 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 Chapter 1

  16. capital resources • the assets used in the production of goods and services Chapter 1

  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. Chapter 2

  18. 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

  19. List the three types of economic resources and give an example of each. Chapter 1

  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. Chapter 2

  21. Supply and Demand • Entrepreneurs look for unmet needs to satisfy consumer needs and wants. Chapter 2

  22. Capital Investment and Job Creation • Entrepreneurs invest in their communities by • contributing to the local economy • providing jobs Chapter 2

  23. Change Agents • The creation of new products can: • change the way people live • alter the way people conduct business Chapter 2

  24. What are some things entrepreneurs contribute to the U.S. economy? Chapter 1

  25. Lesson 2.2How 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. Chapter 2

  26. Vocabulary • capitalism • profit • economic decision making • scarcity • opportunity cost Chapter 2

  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? Chapter 2

  28. Command Economy • Production decisions are made by the government. • Few choices exist in the marketplace. Chapter 1

  29. Market Economy • Production decisions are made by individuals and businesses. • Entrepreneurship thrives in a market economy. • Many choices exist in the marketplace. Chapter 1

  30. Traditional Economy • Production occurs the way it has always occurred. • Most production is consumed. • Left over production is sold or traded. Chapter 1

  31. Mixed Economy • These economies contain elements of command and market economies. • The government is still involved in the marketplace. Chapter 1

  32. communism • a command economic system • the government controls most of the resources and decisions Chapter 2

  33. How does the type of economy affect the way the basic economic questions are answered? Chapter 1

  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 Chapter 2

  35. The U.S. economic system of capitalism is based on four basic principles. • 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. Chapter 2

  36. Profit • 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 Chapter 2

  37. Describe the four basic principles of the U.S. economic system. Chapter 1

  38. Economic Choices • economic decision making • the process of choosing which needs and wants, among several, you will satisfy using the resources you have Chapter 2

  39. 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

  40. Opportunity Cost • opportunity cost • the value of the next-best alternative (the one you pass up) Chapter 1

  41. What factors affect economic choices? Chapter 1

  42. Functions of Business • Production • The production function creates or obtains products or services for sale. Chapter 2

  43. Marketing • The goal of marketing is to attract as many consumers as possible. • The marketing mix includes: • product • distribution • price • promotion Chapter 2

  44. Management • The duties of management include: • setting goals • deciding on responses to competition • solving problems • overseeing employees • evaluating business activities Chapter 2

  45. Finance • Financial duties include: • determining the amount of capital needed • determining how capital will be obtained • managing the financial records of the business Chapter 2

  46. What are the functions of business? Chapter 1

  47. Lesson 2.3What 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. Chapter 2

  48. Vocabulary • supply • demand • equilibrium price and quantity • fixed costs • variable costs • marginal benefit • marginal cost • economies of scale Chapter 2

  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 Chapter 2

  50. Chapter 2

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