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Economics Overview

Economics Overview. How does business work?. Basic Needs. Private Wants. Public Needs. Food Water Shelter. A family may want a new kitchen table A business may want a new computer system. Highways Hospitals. Wants and Needs.

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Economics Overview

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  1. Economics Overview How does business work?

  2. Basic Needs PrivateWants PublicNeeds • Food • Water • Shelter • A family may want a new kitchen table • A business may want a new computer system • Highways • Hospitals Wants and Needs • Wants and needs determine what products and services businesses provide

  3. How to Define Business Your wants and needs are usually satisfied by a business. Businesses seek to make a profit. • Without a profit, a company cannot survive. • The wealth created by businesses benefits the entire community because businesses pay taxes and provide jobs.

  4. How to Define Business Businesses provide consumers with necessities, such as food, clothing, housing, medical care, and transportation. Businesses also provide goods and services that make life easier and better.

  5. Offer quality products Offer outstanding service Offer competitive prices Significance of Competition • Competition happens when businesses continually try to improve their products and services and do better than one another.

  6. The success of a business depends on how well key activities are coordinated, managed, and performed. Identifying opportunities for products and/or services Evaluating the demand for products and/or services Managing the production of goods and/or services Marketing the goods and/or services Keeping records to satisfy government requirements and improve processes Successful Businesses

  7. Business Activities • Therefore, businesses undertake 6 activities when developing a new product: • Identify opportunities • Evaluate demand • Obtain money • Manage production • Market products • Keep records

  8. Factors of Production NaturalResources LaborResources CapitalResources EntrepreneurialResources

  9. Renewable resources can be reproduced Nonrenewable resources are limited • Wheat • Cattle • Coal • Iron • Oil Natural Resources • Natural resources can be processed in various ways to create goods.

  10. Labor Resources • Labor resources can be skilled or unskilled, physical or intellectual.

  11. Capital Resources • Capital resourcesare also called capital goods. Examples of capital resources include: • Delivery trucks • Supermarkets • Cash registers • Farm equipment

  12. Entrepreneurial Resources • Entrepreneurial resources meet society’s changing wants and needs. Entrepreneurial resources are individuals who start and direct businesses to produce goods and services to satisfy needs or wants. Labor resources are people who produce the goods or services.

  13. What should beproduced? How should it be produced? Who should share in what is produced? Deciding to use a resource for one purpose means giving up the opportunity to use it for something else. This is called opportunity cost. The methods and labor used as well as the quality of items produced are important factors. In most societies, people can have as many goods and services as they can afford to buy. 3 Basic Economic Questions

  14. Different Types of Economies • Different economic systems answer these questions in different ways 3 Types of Economic Systems • Market Economy • Command Economy • Mixed Economy

  15. Market Economy A market economy can also be called a private enterprise system, the free enterprise system, or capitalism.

  16. Market Economy The higher the price for goods or services, the less consumers will buy. The lower the price, the more consumers will buy. Supply and demand interact with each other to form the equilibrium price.

  17. Command Economy In a command economy, the government owns and controls all the resources and businesses.

  18. Mixed Economy • Most nations have a mixed economy, which combines elements of capitalism and socialism.

  19. Four Stages of the Business Cycle

  20. Prosperity • Prosperity results from low unemployment, high production of goods and services, and the opening of new businesses.

  21. Recession During a recession, businesses produce less, so they need fewer workers.

  22. Depression A depression can be limited to one country but usually spreads to related countries.

  23. Recovery • Production starts to increase during a recovery.

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