Introduction to Business

1. Introduction to Business Economic Resources and Systems

2. 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 • Scarcitymeans there are limited resources for satisfying unlimited wants and needs Making Economic Decisions

3. 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 Factors of Production

4. 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 Natural Resources

5. 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? Labor and Capital Resources

6. 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 Entrepreneurial Resources

7. 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? Economic Systems

8. Economic Systems – • Methods societies use to distribute resources • Two basic types: 1) market 2) command Different Types of Economies

9. 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 Market Economy

10. 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) Command Economy

11. 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? For Discussion

12. 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 Homework – Due Friday, September 18, 2009