POB Lesson 1.01

1. ESSENTIAL STANDARD
1.00
Understand the role of business in the global
economy.
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2. OBJECTIVE 1.01
Understand economic systems.
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3. EQ
 How do businesses satisfy needs and wants?
 What are the 6 steps necessary for making
choices?
 What is the relationship between who answers
economic questions and the type of economic
systems that exists in a country?
 What are the self-regulating principles of a market
economy?
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4. SATISFYING NEEDS
AND WANTS
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5. SATISFYING NEEDS AND WANTS
What are needs?
Required in order to live
What are wants?
Things that add comfort and pleasure in
your life.
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6. SATISFYING NEEDS AND WANTS
CONTINUED
What are goods?
 things that you can see and touch
What are services?
 activities that are consumed at the same time they
are produced.
The United States economy is the largest
producer of goods and services in the world.
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7. SATISFYING NEEDS AND WANTS
CONTINUED
 How do businesses use economic resources to
produce goods and services?
 Economic Resources: also called factors of
production, are the means through which goods
and services are produced
 The types of economic resources are:
Natural
Human
Capital
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8. SATISFYING NEEDS AND WANTS
CONTINUED
 What are natural  What are human
resources? resources?
Raw materials produced by The people who contribute
nature. physical and mental energy
to the production process.
Many natural resources
are nonrenewable.
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9. SATISFYING NEEDS AND WANTS
CONTINUED
What are capital resources?
tools, equipment, and buildings that are
used to produce goods and services .
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10. SATISFYING NEEDS AND WANTS
CONTINUED
What is the basic economic problem?
The basic economic problem exists due to limited
resources for satisfying unlimited needs and
wants.
What is scarcity?
not having enough resources to satisfy the
unlimited needs and wants.
The scarcity of resources for satisfying
needs and wants influences choices.
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11. SATISFYING NEEDS AND WANTS
CONTINUED
 What is the purpose of economic decision-making?
 the process of choosing which wants, among several
options, will be satisfied.
 What happens to choices in a tradeoff?
 the process of giving up something for gaining
something else.
 What is opportunity cost ?
 the value of the next-best alternative that you did
not choose.
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12. NEEDS AND WANTS VIDEO
 http://www.teachertube.com/viewVideo.php?video_id=14871
 (3:39)
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13. SIX STEPS OF ECONOMIC
DECISION-MAKING
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14. ECONOMIC DECISION-MAKING
 What is economic decision-making?
 means of choosing a course of action among several
alternatives.
 What are the 6 steps of economic decision -making?
1. Defining the problem
2. Identifying choices
3. Evaluating the advantages and disadvantages of
each choice
4. Choosing one choice
5. Acting on the choice
6. Reviewing the decision
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15. ECONOMIC DECISION-MAKING
CONTINUED
Try to solve a problem
Problem: Adjust the foundation of a house
Choices: Ignore the problem
Contact companies located in the same city
Contact companies located in the next city
Contact companies located in other cities
What choice would you make?
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16. ECONOMIC DECISION-MAKING
CONTINUED
Some advantages: location of local
companies, companies that guarantee of
services, and companies that provides simple
explanation of necessary services
Some disadvantages: prices for services and
location of company in next city or other cities
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17. ECONOMIC DECISION-MAKING
CONTINUED
Choosing one choice: A local company that
guarantees services and provides simple
explanation of services.
Acting on choice: Schedule for local company
to provide services of adjusting foundation of
house.
Reviewing decision: Routinely check on
condition of foundation of house.
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18. MAIN TYPES OF
ECONOMIC SYSTEMS
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19. ECONOMIC SYSTEMS
What are the three economic questions that all economies must
answer?
• What to produce?
• How to produce?
• For whom to produce?
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20. ECONOMIC SYSTEMS
 What is an economic system?
 a nation’s plan for answering the three economic
questions.
 The main types of economic systems are:
 Command or Communist
 Market
 Traditional
 Mixed
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21. ECONOMIC SYSTEMS
Who owns the resources in the main types
of economic systems?
 Command  Centered on family
 Market  Government
 Traditional  The people
Who answers the economic questions?
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22. MARKET ECONOMY
SELF-REGULATING
PRINCIPLES
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23. UNITED STATES ECONOMIC SYSTEM
• What is capitalism?
•the freedom of consumption and
production of goods and services.
• What type of economic system does the
United States have?
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24. UNITED STATES ECONOMIC
SYSTEM CONTINUED
The four principles of U.S. economic system are:
 Private property
 can own, use, or dispose of things of value.
 Freedom of choice
 can make decisions independently and must accept
consequences of those decisions.
 Profit
 money left from sales after all of the costs of operating a
business have been paid.
 Competition
 the rivalry among businesses to sell their goods and services.
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25. MARKET ECONOMY
 What is the role of consumers in a market economy?
 A consumer buys and uses goods and services. Consumers
decide what to buy, where to buy, from whom to buy, and what
price they are willing to pay.
 A consumer includes individuals, businesses, and government.
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26. MARKET ECONOMY CONTINUED
What is the role of producers in a market economy?
 Producers are individuals and organizations that determine
what products and services will be available for sale.
 Producers determine what products and services will be
available, what needs and wants they will satisfy, and the
prices they want to receive.
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27. MARKET ECONOMY CONTINUED
The market economy is based on the principles of
supply and demand .
What is demand?
 the quantity of goods or services that consumers are
willing and able to buy.
 Examples: High demand for a new gaming console or
electronic item causes the price to rise.
 Last year’s fashions go “out of style” and drop in price
occurred.
What are some examples of consumer
demand?
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28. MARKET ECONOMY CONTINUED
 What is supply?
 refers to the quantity of goods or services that businesses
are willing and able to provide.
 Supply Examples: Many companies are creating an mp3
player, therefore the price drops.
 Only a few companies started selling tablets, such as the
iPad, so the price was high when they were introduced to the
public.
 What are some examples of how producers establish
supply?
 Producers establish the quantity of goods or services that
will be produced to meet the demands of consumers.
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29. SUPPLY AND DEMAND GRAPHS
Intro to Business, 6e, Thomson South-Western 29

30. SUPPLY AND DEMAND GRAPHS
Intro to Business, 6e, Thomson South-Western
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31. SUPPLY AND DEMAND GRAPHS
Market (equilibrium) price is the point where supply and demand
are equal.
Intro to Business, 6e, Thomson South-Western 31