Business Essentials 1. Topics Satisfying needs and wants Basic economic problem Six steps of...
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Business Essentials
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TopicsSatisfying needs and wantsBasic economic problemSix steps of economic decision-makingMain types for economic systemsMarket economy self-regulating principles
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The difference between must and must haves.
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Satisfying Needs and WantsWhat are needs?What are wants?
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Satisfying Needs and Wants continuedWhat are goods? What are services? The United States economy is the largest
producer of goods and services in the world.
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Satisfying Needs and Wants continuedHow do businesses use economic resources
to produce goods and services?The types of economic resources are:
NaturalHumanCapital
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Satisfying Needs and Wants continuedNatural resources
are raw materials produced by nature.
Many natural resources are nonrenewable.
Human resources are the people who contribute physical and mental energy to the production process.
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Satisfying Needs and Wants continued
Capital resources are the tools, equipment, and buildings that are used to produce goods and services.
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Satisfying Needs and Wants continuedThe basic economic problem exists due to
limited resources for satisfing unlimited needs and wants.
Scarcity is not having enough resources to satisfy the unlimited needs and wants.
The scarcity of resources for satisfying needs and wants influences choices.
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Satisfying Needs and Wants continued
What is the purpose of economic decision-making?
What happens to choices in a tradeoff?
What is opportunity cost ?
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Economic Decision-MakingEconomic decision-making is a means of
choosing a course of action among several alternatives.
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Economic Decision-Making continuedThe six steps in the economic decision- making
process are:Defining the problemIdentifying choicesEvaluating the advantages and disadvantages
of each choiceChoosing one choiceActing on the choiceReviewing the decision
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Economic Decision-Making continuedSolve a problem
Problem: Adjust the foundation of a houseChoices: Ignore the problem
Contact companies located in the same city
Contact companies located in the next city
Contact companies located in other cities
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Economic Decision-Making continuedSome advantages: location of local
companies, companies that guarantee of services, and companies that provides simple explanation of necessary services
Some disadvantages: prices for services and location of company in next city or other cities
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Economic Decision-Making continuedChoosing one choice: A local company that
guarantees services and provides simple explanation of services.
Acting on choice: Schedule for local company to provide services of adjusting foundation of house.
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Economic Decision-Making continuedReviewing decision: Routinely check on
condition of foundation of house.
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Economic SystemsWhat are the three economic questions that all
economies must answer?
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Economic SystemsAn economic system is a nation’s plan for
answering the three economic questions.
The main types of economic systems are:Command or CommunistMarketTraditionalMixed
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Economic SystemsWho owns the resources in the main
types of economic systems?Command
Market
Traditional
Who answers the economic questions?
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Centered on family
Government
The people
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United States Economic System continuedThe four principles of U.S. economic system
are:Private property – can own, use, or dispose
of things of value.
Freedom of choice – can make decisions independently and must accept consequences of those decisions.
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United States Economic System continuedProfit – money left from sales after all of the
costs of operating a business have been paid.
Competition – the rivalry among businesses to sell their goods and services.
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Market EconomyWhat is the role of consumers in a market
economy?
A consumer includes individuals, businesses, and government.
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Market Economy continuedWhat is the role of producers in a market
economy?
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Market Economy continuedThe market economy is based on the principles
of supply and demand.Demand is the quantity of goods or services
that consumers are willing and able to buy.What are some examples of consumer demand?
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Market Economy continuedSupply refers to the quantity of goods or
services that businesses are willing and able to provide.
What are some examples of producers of supplies?
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Supply and Demand Graphs
Intro to Business, 6e, Thomson South-Western
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Supply and Demand Graphs
Intro to Business, 6e, Thomson South-Western
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Supply and Demand GraphsMarket (equilibrium) price is the point
where supply and demand are equal.
Intro to Business, 6e, Thomson South-Western