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Entrepreneurship
Entrepreneurs in a Market Economy
2.1 Entrepreneurs Satisfy Needs and Wants
Goals
 Distinguish between __________ and ____________.
 Describe the types of economic resources.
 Explain the role of entrepreneurs in the U.S. ____________________.
Vocabulary
 needs
 wants
 economic _______________
Is It a Need or a Want?
 Needs*
 things that are _____________________ for survival
 wants*
 things you _____________ you must have in order to be _________________
 add comfort and pleasure to your life
 The role of businesses is to _________________ and distribute goods and services that people
_______________ and _________________.
Needs
 Maslow’s hierarchy of needs states that:
 People’s basic psychological ___________ must be satisfied before they can focus on
higher level ________________.
Needs
 are ______________ for each person
 vary by ____________________
 Wants
 economic wants
 a ________________ for material goods and services
 are the basis of an _______________
 clothing
 housing
 noneconomic wants
 ________________ things
 sunshine
 fresh air
 cars
 happiness
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Needs and Wants are ________________
 Needs and wants _____________ end.
 One purchase often leads to ___________________.

What is the difference between a need and a want?
Economic Resources
 economic resources
 the means through which goods and services are _____________________
 goods
 _______________ you can see and touch
 services
 activities that are consumed as they are __________________
 Entrepreneurs use economic _______________ to create the goods and services consumers use
Factors of Production
 natural resources
 ____________ materials supplied by nature
 human resources
 the people who __________________ goods and services
 specialization
 when individual workers focus on _____________ tasks
 each worker becomes more ___________________ and productive
 division of labor
 divides the _____________________ process into separate tasks
 workers specialize in specific tasks
 the group as a whole becomes more ______________________
 the assets used in the ______________________ of goods and services
Limited Resources
 Economic resources are limited.
 Individuals, businesses, and countries compete for __________________.
 High demand for a limited resource drives up the price for the _________________.
Law of Diminishing Returns
 If one factor of ______________ is increased while others stay the same, the resulting increase
in output (product produced) will level off after some time and then will __________________.
List the three types of economic resources and give an example of each.
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Role of Entrepreneurs in the U.S. Economy
 Entrepreneurs play an important role in the U.S. _________________.
 The development of small businesses helps to ensure a strong ________________ future.
Supply and Demand
 Entrepreneurs look for unmet needs to satisfy consumer __________ and _____________.
Capital Investment and Job Creation
 Entrepreneurs invest in their communities by
 contributing to the local ____________
 providing ____________
 Change Agents
 The creation of new products can:
 change the way people _____________
 alter the way people conduct _________________
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Entrepreneurship
Lesson 2.2
How Economic Decisions are Made
Goals
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


Compare and contrast different types of _______________ systems.
Describe the characteristics of the U.S. _______________.
Explain how scarcity affects economic decisions.
Explain how business functions are used to satisfy _________________.
Vocabulary
 capitalism
 profit
 economic decision making
 scarcity
 opportunity cost
Economic Systems
 Each economy must answer three basic questions regarding goods and services:
 Which ones will be _______________?
 How will they be ________________?
 Whose needs and wants will they satisfy?
Command Economy
 __________________ decisions are made by the government.
 Few choices exist in the _________________________.
Market Economy
 _____________________ decisions are made by individuals and businesses.
 Entrepreneurship thrives in a market __________________.
 Many choices exist in the ______________________.
Traditional Economy
 __________________ occurs the way it has always occurred.
 Most ____________________ is consumed.
 Left over __________________ is sold or traded.
Mixed Economy
 These ______________ contain elements of command and market economies.
 The government is still ______________ in the marketplace.
 Communism
 a ________________ economic system
 the ________________________ controls most of the resources and decisions
 The U.S. Economic System
 capitalism
 the ___________ ownership of resources by individuals rather than by the government
 individual businesses and consumers make _________________ decisions
 also called free ____________________
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Entrepreneurship
The U.S. economic system of capitalism is based on four basic principles.
 Private Property
 You may _________ whatever you want as long as you operate within the law.
 Freedom of Choice
 Government intervention occurs only when individual decisions will bring
____________ to others.
 Profit
 the difference between the _____________ earned by a business and the
_______________ of operating the business
 The opportunity to earn a profit is at the heart of the free-enterprise system.
 Competition
 the ____________ among businesses to sell their goods and services

Economic Choices
 economic decision making
 the process of _______________ which needs and wants, among several, you will satisfy
using the resources you have
Scarcity
 scarcity
 occurs when there are _______________ resources available to meet the unlimited
needs and wants of consumers
 Scarcity ________________ you to make decisions about tradeoffs.
Opportunity Cost
 opportunity cost
 the value of the next-best _________________ (the one you pass up)
What factors affect economic choices?
Functions of Business
 Production
 The ___________________ function creates or obtains products or services for sale.
Marketing
 The goal of marketing is to attract as many consumers as possible.
 The marketing mix includes:
 product
 ________________
 price
 promotion
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Management
 The duties of management include:
 setting goals
 __________________ on responses to competition
 solving problems
 _________________ employees
 evaluating business activities
Finance
 Financial duties include:
 ______________ the amount of capital needed
 ______________ how capital will be obtained
 managing the financial records of the business
What are the functions of business?
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Entrepreneurship
Lesson 2.3
What Affects Price?
Goals
 Recognize how supply and demand ______________ to determine price.
 Describe how costs of doing business affect the _____________ of a good or service.
 Explain the _________________ of different market structures on price.
Vocabulary
 supply
 demand
 equilibrium price and quantity
 fixed costs
 variable costs
 marginal benefit
 marginal cost
 economies of scale
How Much Is Enough?
 supply
 how much of a good or service a producer is willing to ____________ at different prices
 demand
 the quantity of a good or service that consumers are willing to ________ at a given price
 when the demand of a product is affected by its price
 Demand Elasticity
When the demand of a product is _________________ by its price
 elastic demand
 when a change is price ________________ a change in demand
 inelastic demand
 when a change in price _______________ very little change in demand
When Supply and Demand Meet
 equilibrium price and quantity
 the point at which the supply and demand curves ________________
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Entrepreneurship
Costs of Doing Business
 fixed costs
 costs that must be paid _______________ of how much of a good or service is produced
 variable costs
 costs that _______________ depending on the quantity of the good or service produced
Fixed costs will be incurred regardless of the level of sales
 marginal benefit
 _______________ the advantages of producing one additional unit of a good or service
 marginal cost
 _____________ the disadvantages of producing one additional unit of a good or service
Economies of scale
 the cost advantages obtained due to ______________________
 A lower average cost per unit is _________________ through increased production because
costs can be spread over an increased number of units.
How do the costs of doing business affect prices?
Market Structure and Prices
 Perfect Competition
 Characteristics of perfect competition include:
 a very ___________ number of businesses
 nearly identical products
 many well-informed ____________
 difficult to raise prices
 ___________________ have more control over the market
 businesses can leave or enter the market easily
Monopolistic
Characteristics of monopolistic competition include:
 a large number of _______________________ businesses
 goods and services that are somewhat different
 each business has a ______________ share of the market
 prices are determined competitively
 differentiating ______________________ is important
 businesses can easily enter or leave the market
Oligopoly
Characteristics of an oligopoly include:
 a _________ number of businesses that gain the majority of total sales revenues
 the goods are similar and are close substitutes
 businesses can ______________ prices
 it is hard to enter the _________________
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Entrepreneurship
Monopoly
 where there is only _____________ provider of a good or service
 Because of a lack of competition, companies can charge _________________ price they like.
 Barriers that make it difficult for new businesses to enter a _________________ is a primary
reason that monopolies exist.
How does the market structure affect the price of a good or service?
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