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Essential Standard 5.00 Understand fundamental economic concepts to obtain a foundation for employment in business. 1 Objective 5.01 Understand & Distinguish between economic goods and services Explain the concept of economic resources 2 Topics • • • • Satisfying needs and wants Basic economic problem Main types for economic systems Market economy self-regulating principles 3 Satisfying Needs and Wants 4 Satisfying Needs and Wants • What are needs? • What are wants? 5 Satisfying Needs and Wants continued • What are goods? • What are services? • The United States economy is the largest producer of goods and services in the world. 6 Satisfying Needs and Wants continued • How do businesses use economic resources to produce goods and services? • The types of economic resources are: – Natural – Human – Capital 7 Satisfying Needs and Wants continued • What are natural resources? • What are human resources? Many natural resources are nonrenewable. 8 Satisfying Needs and Wants continued What are capital resources? 9 Satisfying Needs and Wants continued • What is the basic economic problem? • What is scarcity? 10 Satisfying Needs and Wants continued • What is the purpose of economic decision-making? • What happens to choices in a tradeoff? • What is opportunity cost ? 11 Main types of economic systems 12 Economic Systems What are the three economic questions that all economies must answer? 13 Economic Systems • What is an economic system? • The main types of economic systems are: – Command or Communist – Market – Traditional – Mixed 14 Economic Systems • Who owns the resources in the main types of economic systems? – Command – Centered on family – Market – Government – Traditional – The people • Who answers the economic questions? 15 Market economy self-regulating principles 16 United States Economic System • What is capitalism? • What type of economic system does the United States have? 17 United States Economic System continued The four principles of U.S. economic system are: • Private property • Freedom of choice • Profit • Competition 18 Market Economy • What is the role of consumers in a market economy? • A consumer includes individuals, businesses, and government. 19 Market Economy continued What is the role of producers in a market economy? 20 Market Economy continued The market economy is based on the principles of supply and demand. – What is demand? – What are some examples of consumer demand? – What is supply? – What are some examples of how producers establish supply? 21 Supply and Demand Graphs Intro to Business, 6e, Thomson South-Western 22 Supply and Demand Graphs Intro to Business, 6e, Thomson South-Western 23 Supply and Demand Graphs Market (equilibrium) price is the point where supply and demand are equal. Intro to Business, 6e, Thomson South-Western 24