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MONEY – The basic problem

MONEY – The basic problem. It doesn’t grow on trees!. Money Works: Money, customers and business. SCARCITY. One world. Scarce resources. Distributed differently around the world Many people have basic needs unmet. Money Works: Money, customers and business. NEEDS. Water. Clothing.

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MONEY – The basic problem

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  1. MONEY–The basic problem It doesn’t grow on trees! Money Works: Money, customers and business

  2. SCARCITY One world Scarce resources Distributed differently around the world Many people have basic needs unmet Money Works: Money, customers and business

  3. NEEDS Water Clothing Food Shelter Safety Money Works: Money, customers and business

  4. WANTS Not essential for survival What do you want? What do you need? Money Works: Money, customers and business

  5. CHOICES Limited incomes Can’t have it all Choose between goods and services To buy or not to buy Best value (A) (B) Money Works: Money, customers and business

  6. THINKING ABOUT CHOICES… • Have you ever made a difficult choice? What influenced your decision? • Do you always get value for money? • How do you make your money go further? Governments have to make difficult decisions every day Can you think of examples? Money Works: Money, customers and business

  7. BUSINESS & CHOICE • Businesses provide goods and services. • Compete with each other for customers. • Compete on price and other factors, e.g. quality, customer service, brand, prestige. Businesses make a profit by: - getting the most revenue they can for theirgoods and services - keeping their costs as low as possible. Money Works: Money, customers and business

  8. MONEY–The basic problem It doesn’t grow on trees! Money Works: Money, customers and business

  9. EARLY SOCIETIES developing skills Meeting basic needs making more than they need Money Works: Money, customers and business

  10. TRADE - BARTER Farmer one produces too much wheat for his family. Farmer two producestoo much cheese. Barter - what willing to exchange for what Money Works: Money, customers and business

  11. PROBLEM? Do you want what I have? Have you got what I want? How can we find each other? Can we agree an exchange? Could someone give me a better exchange? I can’t find someone who wants to swap with me! Just too difficult!!! Money Works: Money, customers and business

  12. WHAT WE NEED IS SOMETHING… • That we can all use and recognise • That is always worth the same • That can be divided up so we know how many parts make up one whole • That is easy to carry around • That is hard-wearing, as we will pass it around Then we can use this to pay each other for goods and services! Money Works: Money, customers and business

  13. MONEY!!! Medium of exchange Unit of account Store of wealth Money Works: Money, customers and business

  14. DEVELOPING MARKETS A farmer takes his surpluswheatto the market. He sells this for money. He buys the other food he needs using the money – not just cheese! He is now a producer of his goods and is a supplier to the market. Money Works: Money, customers and business

  15. DEVELOPING MARKETS The farmer makes very good quality wheat but can’t produce enough to meet the quantity his customers want and can pay for. As customers are demanding more than he can supply, he finds customers are prepared to pay more. The price goes up. Money Works: Money, customers and business

  16. DEVELOPING MARKETS The farmer decides to specialise in producing more wheat, as he is particularly good at growing this. As he gets better he finds he can reduce how much it costs to produce his wheat. He is so successful and getting such a high price, other farmers decide it might be a good idea to look at producing more wheat too. Money Works: Money, customers and business

  17. DEVELOPING MARKETS • Now several farmers bring their produce to the market. Customers have choice. What will the farmer have to do to keep his customers? Money Works: Money, customers and business

  18. A SIMPLE MARKET Market – buyers and sellers come together Price – determined by demand and supply Demand – the amount buyers are willing and able to pay Supply – the quantity suppliers are willing to provide at a certain price Supply demand Money Works: Money, customers and business

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