Download of goods and services should be produced?

Name: ______________________________________ Date: _______ Period:_______
Entrepreneurship & Small Business Management Chapter 1 What is Entrepreneurship?
Chapter 1.1 Objectives
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Discuss the role of small business and entrepreneurship in the economy.
Describe economic systems.
Explain how economics is about making choices.
Discuss the role of economic indicators and business cycles.
Describe what entrepreneurs contribute to the economy.
Small Business and Entrepreneurship
As an entrepreneur, you accept the risks and responsibilities of business ownership.
entrepreneur- an individual who undertakes the _________________________,
_______________________, and ____________________________ of a business
Creating and running a business _____________________ requires a variety of skills.
venture - a new business undertaking that involves ____________
Starting a home-based business calls for __________________________________ on the
part of the owner. About one in three households is involved in an
__________________________ enterprise.
entrepreneurship - acting like an or having an entrepreneurial mind-set
entrepreneurial - the process of recognizing an _______________________________,
testing it in the market, and gathering resources necessary to go into business
Knowledge of _______________________________ contributes to an understanding of how
entrepreneurs and customers interact.
economics - the study of how people allocate scarce ___________________________
to fulfill their unlimited wants
All economic systems attempt to answer four basic questions.
_____________________________ goods and services should be produced?
_______________ ______________________ of goods and services should be produced?
_________________________________ should goods and services be produced?
____________ _______________________ should goods and services be produced?
The Free Enterprise System & The Profit Motive
Most democratic nations have a free enterprise system. Making a ________________ is a
primary incentive of free enterprise.
profit - money that is __________________ ______________ after all expenses of running a
business have been deducted from the income
free enterprise system - an economic system in which people have the right to choose:
1. what products to ______________________
2. to own private property
3. to choose to _________ a business and _______________with other businesses
Competition
The _______ ___ _____________________ is a key element in a market economy. It
helps to ensure lower prices, as well as higher quality, better service and reputation.
Perfect competition is a market structure in which there are numerous buyers and sellers
and ___ ____________ ___________ ___ ____________ can affect price.
market structure - the nature and ________________________ of competition among
businesses operating in the same industry; market structure affects market price
The Free Enterprise System
The government may grant a temporary _________________________ to an inventor.
monopoly - a market structure in which a particular commodity has only ___ ____________.
Under antitrust laws, some forms of oligopoly are _____________________________
oligopoly - a market structure in which there are just a __________ competing firms
Think – Pair – Share!
Goods and Services
Goods and services are the products of our economic system.
goods - _______________________ (or physical) products of our economic system that
satisfy consumers’ wants and needs
services -_______________________ (nonphysical) products that satisfy consumers’
wants and needs
Entrepreneurs respond to consumers’ __________________________ and
__________________________ with goods and services.
want - something that you do not have to have for survival, but would _________ to have
need - a basic requirement for ____________
Factors of Production
There are four basic factors of production:
 _____________________________
factors of production - the
 _____________________________
__________________ businesses use
 _____________________________
to produce the goods and services that
 _____________________________
people want
Scarcity
The principle of scarcity means _____________ ____ one thing in order to have something else.
scarcity - the difference between demand and supply; limited resources
Supply and Demand Theory
In a free enterprise system, the price of a product is determined by ________________.
demand- the quantity of goods or services that consumer are ____________________ and
able to buy at various prices
The _______________________ to which demand for a product is affected by its
_________ is either governed by _______________ demand or _________________
demand.
elastic demand - situations in which a change in price creates a ______________ in
demand
inelastic demand - situations in which a change in price has little or ______
________________________ on demand for products
Due to the law of diminishing marginal utility, even when a product’s price is low, people will
not keep buying it indefinitely.
diminishing marginal utility - the effect or law that establishes that _______________
______________________ does not determine demand, and other factors, such as income,
taste, and the amount of product already owned, play a role as well
Supply is continually shifting in the marketplace.
supply - the __________________of goods or services that producers are willing to provide.
Because supply and demand are continually shifting in the marketplace, the change creates
surpluses, shortages, and equilibrium.
equilibrium - the point at which consumers buy all of a product that is supplied; at this point,
there is neither a ______________________ nor a _____________________.
Economic Indicators and Business Cycles
There are four stages of the business cycle: __________________,
_______________________, _____________________, and ___________________.