Entrepreneurs in a Market Economy

1. Entrepreneurs in a Market Economy Ch 2.1

2. Ideas in Action pg. 35 • What type of interest do you think Scott had that helped him to find success in this business? • Which of the lessons that Scott has learned do you think is most important? • Why do you think it is important to find balance between work and play?

3. Do you want it or need it? • Needs – are things you must have in order to survive. • Wants – those things that you think you must have in order to be satisfied. • What do you need? What do you want? • Maslow’s Hierarchy of Needs Pyramid

5. 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.

6. Factors of Production • Natural Resources – raw materials supplied by nature. • Human Resources – people who create goods and services. • Capital Resources – assets invested in the production of goods and services.

7. Role of Entrepreneurship in the U.S. Economy • Supply and Demand (pg 40) • Capital Investment and Job Creation • Change Agents • What roles do needs and wants play in determining what is produced in an economy? • Think of something you would describe as a “need” but your parents would describe as a “want.” • How does the availability of economic resources affect decisions the entrepreneurs make?

8. How Economic Decisions Are Made • Focus on Economics (pg. 42) • Economic Systems – must answer 3 questions: • What goods and services will be produced? • How will the goods and services be produced? • What needs and wants will be satisfied with the goods and services produced?

9. Economic Decisions • Command Economy – the government determines what, how and for whom products and services are produced. • Market Economy – individuals and businesses decide what, how, and for whom goods and services are produced. • Traditional Economy – goods and services are produced the way they have always been produced. • Mixed Economy – elements of the command and market economics are combined.

10. The U.S. Economic System • What type of economic system do you think the United States has? • Capitalist – the private ownership of resources by individuals rather by the government, is another name for the economic system in the U.S.

11. U.S. Based on 4 Basic Principals • Private Property – you can own, use, or dispose of things of value. • Freedom of Choice – you can make decisions independently and must accept the consequences of those decisions. • Profit – the differences between the revenues taken in by a business and the costs of operating the business. • Competition – the rivalry among businesses to sell their goods and services.

12. Economic Choices • Economic Decisions Making – the process of choosing which needs and wants, among several, you will satisfy using the resources you have. • Scarcity – occurs when people’s needs and wants are unlimited and the resources are limited. • Opportunity Cost – the value of the next-best alternative—the one you pass up.

13. Functions of the Business (pg. 47) • Production – provides products/services • Marketing – product, distribution, price, and promotion • Management – developing, implementing, and evaluating plans. • Finance – the amount of capital needed to start the business and how the capital will be obtained.

14. What Affects Price? • Supply – is how much of a good or service a producer is willing to produce at different prices. • Demand – is an individual’s need or desire for a product or service at a given price. • Equilibrium Price and Quantity – point at which the supply and demand curves meet.

15. Cost of Doing Business • Fixed Costs – costs that must be paid regardless of how much of a good or service is produced. • Variable Costs – that go up and down depending on the quantity of the goods and services produced. • Marginal Benefit – measures the advantages of producing one additional unit of a good or service. • Marginal Cost – measures the disadvantages of producing one additional unit of a good or service.

16. Market Structures and Prices • Perfect Competition – very large number of businesses producing nearly identical products and has many buyers. • Monopolistic Competition – large number of independent businesses that produce goods and services that are somewhat different. • Oligopoly – a market is dominated by a small number of businesses that gain the majority of total sales revenue. • Monopoly – there is only one provider of a product or service.