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-Distinguish between wants and needs
Intro
-Define how wants and needs are
satisfied
-Group Activity
Wants and Needs
Wants are the things you wish you
could have. Each person has wants.
Necessary wants are needs.
Satisfying Wants and Needs
With Goods and Services
•Goods can be physically weighed or
measured. (tangible)
•Goods satisfy your wants and needs
for material things that you can see or
touch.
Introduction to Business
Satisfying Wants and Needs
With Goods and Services
•Services are tasks that people or
machines perform. (intangible)
•Services also satisfy some of your
wants for things you can’t see or touch.
Unlimited Wants,
Limited Resources
•Most people have unlimited wants
for goods and services.
•The more money you make, the more
goods or services you want.
Unlimited Wants,
Limited Resources
•A resource is anything that people
can use to make or obtain what they
need or want.
•What are some examples of
resources???
Unlimited Wants,
Limited Resources
•The problem of unlimited wants and
limited resources affects individuals,
companies, and nations.
WHY???
Unlimited Wants,
Limited Resources
Resources limit the number of wants
people can satisfy.
Introduction to Business
Deciding on Your Resources
The decision-making process has five
essential steps:
1.
2.
3.
4.
5.
Identify the problem.
List the alternatives.
Determine the pros and cons.
Make the best decision.
Evaluate your decision.
You have $100 as a resource to help you with your math
class. Whatever action you choose will have to last you the
entire school year. Apply the 5 step process above.
ILDME
Ida Likes Decorating Many Elephants
Introduction to Business
Private Wants versus Public Wants
Wants are the things you wish you could have. Each person has
wants.
A group of people may also share the same wants.
Although these wants are shared, they are considered
private wants.
Some wants are widely shared by many people.
These wants are no longer considered private but become
public wants, such as highways, drinking water, and
education.
For the most part local, state and federal governments
satisfy public wants.
•Business is any activity that seeks profit by providing goods or
services to others.
Businesses satisfy people’s basic needs all the way to their
lavish wants.
Competition and profit motivate these businesses to continually
strive for your business.
Examples of Service business???
Introduction to Business
Business Activities
These activities happen behind every product or
service:
• Organizing
• Managing
• Producing
• Marketing
Introduction to Business
•Profit is the amount of money left
over after a business has paid for the
cost of producing its goods and
services.
•Profit is the motivation for taking the
risk to start a business.
•Companies thrive on competition, or the contest
between businesses to win customers.
•Competition is a direct response to consumers’
wants and needs.
Can you think of some competitors in
the following categories?
•fast food
•pizza delivery
•electronic retailers
•commercial airlines
•luxury automobiles
•cable TV networks
•toothpastes
Introduction to Business
•A consumer is a person who selects,
purchases, uses, or disposes of goods
or services.
•Business is aware of your changing
needs and wants.
Calculating Profit
Sue and Reggie need to raise $100 for their school choir trip.
They plan to make and sell cookies at their school. They
spend $22 on ingredients and price the cookies at 75 cents a
piece. How many cookies do they need to sell to make a $100
profit?
You may log into the computer and use the calculator tool to
complete this problem.
Introduction to Business
Calculating Profit Solution
1.
Add the cost of the materials ($22) to the amount they hope to
fundraise ($1oo). Total is $122
2.
They plan to sell the cookies for $0.75.
3.
$122/$0.75= 162.6666666666666666666666666667
4.
You must round this to a “whole cookie”
5.
Answer= 163 cookies
Introduction to Business
Bernie Madoff ran what might be the biggest fraud of all time,
defrauding investors as much as $50 billion. Some say that the
investors who lost their money were too greedy and should have
known that something was wrong. What do you think?
Introduction to Business
Introduction to Business
Self Interest vs. Greed
• One winter the weather is unusually cold, and a
fuel-oil dealer finds that customers are ordering
much more heating oil. If the dealer raises prices
in response, is this an example of rational selfinterest or greed?
Self Interest vs. Greed
• When driving on the freeway, Carl blows his
horn repeatedly, tailgates cars and cuts in
front of them if he can. Carl explains, “Other
drivers are in my way, and I operate the way I
do to get to my destination sooner.”
• What benefits does Carl receive from
driving in this manner?
• What costs does he incur?
• Is Carl showing rational selfinterest or greed?
• Does Carl’s strategy always work?
•
•
Has a store ever ran out of an item you wanted to buy? Did a
store ever discontinue an item you liked? What did you do?
Why was the store out of the item?
Gas coupon printed but not issued during the
1979 energy crisis
Line at a gas station in Maryland,
.
USA, June 15, 1979
Introduction to Business
Factors of Production
A shortage of resources is called scarcity.
It exists because human wants for goods and
services exceed the quantity of goods and services
that can be produced using all available resources.
Like individual, governments and societies
experience scarcity . . . .
A basic economic problem for any society is how to
manage its resources.
Factors of Production
To meet the wants and needs of its
people, a society must produce goods
and services.
The means to produce them are called
economic resources, or factors of
production.
Natural Resources
The raw materials found in nature are
called natural resources.
Natural resources become factors of
production when we use them to
produce goods.
Natural Resources
Some resources, like wheat and cattle,
are renewable. They can be
reproduced.
Other resources are limited, or
nonrenewable, like coal, iron, and oil.
Human Resources
The knowledge, efforts, and skills
people bring to their work are called
human resources, or labor.
Human Resources
Labor can be skilled or unskilled,
physical or intellectual.
One of the biggest problems facing
many nations today is not a shortage
of labor but a shortage of WHAT???
Capital Resources
Capital resources are the things used
to produce goods and services, like
buildings, materials, and equipment.
As the wants and needs of people
change, so do the needs for capital
resources.
Entrepreneurial Resources
Meeting the changing wants and
needs of people requires
entrepreneurial resources.
Entrepreneurial Resources
Entrepreneurs improve on ways to use
resources, or create and produce new
ones.
A key to dealing with scarcity is to
develop new resources and
technologies.
Types of Economic Systems
Economics is the study of how a
society chooses to use resources to
produce and distribute goods and
services for people’s consumption.
Economic activity affects everyday life.
Types of Economic Systems
The two basic and opposing
economic systems that have been
developed are:
• Market economy
• Command economy
Market Economy
In a market economy economic
decisions are made in the marketplace
according to the laws of supply and
demand.
The Market and Prices
Price is the amount of money given or asked for
when goods and services are bought or sold.
Demand is the amount or quantity of goods and
services that consumers are willing to buy at
various prices.
Supply is the amount of goods and services that
producers will provide at various prices.
The Market and Prices
•Demand and supply work together.
•When the quantity demanded and the
quantity supplied meet, the price is
called the equilibrium price.
Economic Systems
•Capitalism, or private enterprise, is a
market economy system.
•In a capitalist system, resources are
privately owned.
Economic Systems
A
market economy
offers incentives.
 Problems
with a
market economy
•
 EXAMPLES
Profit
 Competition

Those who do not have
the wanted job skills do
not get an income.
• One or two businesses
control the market, thus
leading to higher prices
and lower quality
products
Command Economy
•In a command economy a central
authority makes the key economic
decisions.
•A command economy is also called a
planned or managed economy.
TWO TYPES OF COMMAND ECONOMIES
Communism
*strong command
economy
* the state makes all
the economic
decisions.
Socialism
*moderate command
economy
*there is some form of
private enterprise
EX. China & Cuba
EX. France & Sweden
COMMAND ECONOMY


ADVANTAGES
The primary advantage of
a command economy is
that it guarantees
everyone an equal
standard of living.
The standard of living is
the amount of goods and
services the average
citizen can buy.
DISADVANTAGES
 Little choice of what to
buy.
 No incentive for
entrepreneurship when
you can’t run your own
business.
Mixed Economy
•Most nations have a mixed
economy, a combination of a market
and command economy.
•The state takes care of people’s
needs while the marketplace takes
care of people’s wants.
An economy X is the organized way a nation provides for the
needs and wants of its people. A country’s resources determine
economic activities such as:
• Manufacturing
• Buying
• Selling
• Transporting
• Investing
Introduction to Business
In a pure market economy X, there
is no government involvement in
economic decisions. The market is
free to answer:
• What: Consumers decide what
should be produced in the market
through which products they buy
the most.
• How: Businesses decide how to
produce goods and services by
being competitive and out-selling
their competitors.
• For whom: The people who have
more money are able to buy goods
and services. To make money,
people are motivated to work and
invest their income.
Introduction to Business
A command economy X is a system
in which a country’s government
makes economic decisions and
decides:
• What: One person (often a
dictator) or a group of government
officials decides what products are
needed.
• How: The government owns all
means of production, so it makes
the decisions.
• For whom: Wealth is regulated by
the government to equalize
everyone. Everything from
housing to education is subsidized
by the government.
Introduction to Business
Because all economies in the world today are mixed, a meaningful
classification depends on how much a government interferes with the
free market.
Economic systems can be put on a continuum to compare their
respective levels of government involvement. Economic freedom to the
right of the center encourages competition while systems to the left are
more regulated by their governments.
Introduction to Business
Capitalism is a political and economic philosophy
characterized by marketplace competition and
private ownership of business.
The political system most frequently associated
with capitalism is democracy. Capitalist countries
include:
• The United States
• Japan
Marketing Essentials Chapter 3, Section 3.1
Communism is a social, political, and economic philosophy in which the
government controls the factors of production. There is no financial incentive
for people to increase their productivity because the government regulates
and assigns:
• Employment
• Medical care
• Education
• Housing
• Food
Examples of modern communist
countries are:
• Cuba
• North Korea
• China
Marketing Essentials Chapter 3, Section 3.1
Socialist countries have an increased amount of government
involvement in the economy, but the market is not completely
controlled. The state will generally control noncompetitive
companies in areas like:
• Telecommunications
• Natural resources (gas, water, and power)
• Transportation
• Banking
Modern countries with socialist
elements in their economy
include:
• Canada
• Germany
• Sweden
Economic indicators are figures used to
measure economic performance.
•Economic indicators measure things
like how much a country is producing,
whether its economy is growing, and
how it compares to other countries.
•One way of telling how well an
economy is performing is to determine
how many goods and services it
produces during a certain period of
time.
• Gross domestic product (GDP) The total value of the goods and
services produced in a country in a
given year
•To calculate the GDP, economists
compute the sum of goods and
services.
Economists include four main areas in
calculating the GDP:
• Consumer goods and services
• Business goods and services
• Government goods and services
• Goods and services sold to other
countries


The United States produces so much more
than other countries that is has a higher
standard of living.
The standard of living is the amount of goods
and services the average citizen can buy.
Consumer
goods
and
services
+
Business
goods
and
services
+
Govn’t
goods
and
services
+
Goods
and
services
sold to
other
countries
The GDP doesn’t include the goods and
services that aren’t reported to the
government.
=
Gross
Domestic
Product
GDP and Standard of
Living Activity
The unemployment rate measures
the number of people who are able to
work but don’t have a job during a
given period of time.
There are different reasons for being
unemployed, including:
• Temporary
• Seasonal
• Changes in industry
• Economic slowdown
Inflation is a general increase in the
cost of goods and services.
Inflation can happen when an
economy actually becomes too
productive.
•As the demand for goods goes up, producers
raise their prices.
•To pay the higher prices, workers demand higher
wages.
•When wages go up, producers raise prices again
to pay for the higher wages, and so on.
•This situation can spiral out of control and lead to
hyperinflation.
Deflation is a general decrease in the
cost of goods and services.
When an economy produces more
goods than people want, it has to
lower prices and cut production.
National Debt
•
When the government
spends more on programs
than it collects in taxes, the
difference in the amount is
called the budget deficit.
•
•
If a nation spends less
than its income, it has a
budget surplus.
The government will
probably use a surplus
to:
•
•
•
cut taxes
reduce the national debt
increase spending for
certain programs.
The total amount of money a
government owes is its national debt.
If the debt gets too large, a nation can
become dependent on other nations or
unable to borrow any more money.
National Debt - Bureau of National Debt
Debt Clock
Inflation Activity

Use the internet to find the current price for the
following items:
 Bread
 Gallon
of Milk
 Dozen of eggs
 Pound of sugar


What were the prices for these items 5, 10, and 25
years ago?
Display your findings in chart.
The Business Cycle
Over long periods of time economic
changes seem to form patterns.
The rise and fall of economic activity
over time is called the business
cycle.
The Business Cycle
The four phases of the business cycle
are:
• Prosperity
• Recession
• Depression
• Recovery
The Business Cycle
The repeated rise and fall of economic activity over time is called a business
cycle. What are the four phases of the cycle?
Prosperity
Prosperity is a peak
of economic activity.
Unemployment is low,
production of goods
and services is high,
and new businesses
open.
Recession
During a recession, economic activity
slows down.
There is a general drop in the total
production of goods and services, so
the GDP declines.
The ripple effect is when a recession
in one industry leads to a recession in
other industries.
Depression
•A deep recession that affects the entire
economy and lasts for several years is called a
depression.
•A depression can be limited to one country
but usually spreads to related countries.
During a depression there is:
•
high unemployment
•
low production of goods and services
• excess capacity in manufacturing plants.
Introduction to Business
Depression
The stock market
crash on October 29,
1929, or “Black
Tuesday,” marked the
beginning of the Great
Depression. During
the Great Depression,
the number of people
out of work rose
nearly 800 percent.
Recovery
•A rise in business activity after a recession
or depression is called a recovery.
During a recovery:
• The new demand for goods and services
stimulates more production
• The GDP grows
• New businesses open
• Production starts to increase
• People start going back to work and have
money to spend again
Recovery
A recovery can take a
long time or it can
happen quickly. During
World War II, the United
States recovered from
the Great Depression
much faster because of
the demand for war
production.
•The key phases of the business cycle are
expansion, peak, recession, trough, and
recovery. Economic business cycles affect
businesses, consumers, and governments
and they in turn affect business cycles,
both domestically and globally.
The Business Cycle
The repeated rise and fall of economic activity over time is called a business
cycle. What are the four phases of the cycle?
Did You Ever Wonder?
•What were your thoughts as
you watched this video?
•What is the author’s point of
view?
•Do you agree or do you think
this is a little extreme?
•Does seeing something like
this motivate you take
action?
•What could you do?
•Will this make you think
about a “green” career?
Genuine Progress Indicator (GPI)
•
Is a concept in green economics that has been suggested as a replacement metric for gross
domestic product (GDP).
•
Measures whether or not a country's growth, increased production of goods, and expanding
services have actually resulted in the improvement of the welfare of the people in the
country.
•
Example: the GPI will be zero if the increases in dollar costs of crime and pollution equal the
total dollar rise in production of goods and services, all other factors being constant.
•
Considers whether a country's economic activity over a year has left the country with a better
or worse future possibility of repeating at least the same level of economic activity in the
following years.
•
Example: agricultural activity that uses replenishing water resources, such as river runoff,
will score a higher GPI than the same level of agricultural activity that drastically lowers the
water table by pumping irrigation water from wells.
•
http://dieoff.org/page11.htm
http://www.econedlink.org/lessons/index.php?lesson=NN130
Introduction to Business