Chapter 3 ENTREPRENEURS IN A MARKET ECONOMY
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Transcript Chapter 3 ENTREPRENEURS IN A MARKET ECONOMY
Chapter 3
ENTREPRENEURS IN A
MARKET ECONOMY
LESSONS
3.1 What Is an Economy?
3.2 The Concept of Cost
3.3 Government in a Market Economy
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Chapter 3
Slide 2
Lesson 3.1
WHAT IS AN ECONOMY?
GOALS
Describe market and command
economies.
Define the concept of supply
and demand.
Explain the effects of market
structure on price.
Describe the functions of
business in a market economy.
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Chapter 3
Slide 3
SCARCITY
Scarcity occurs when people’s needs
and wants are unlimited and the
resources to produce the goods and
services to meet those needs and wants
are limited.
Scarcity occurs in every economy.
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Chapter 3
Slide 4
COMMAND ECONOMY
In a command economy, the
government determines what, how, and
for whom products and services are
produced.
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Chapter 3
Slide 5
MARKET ECONOMY
In a market economy, individuals decide
what, how, and for whom goods and
services are produced.
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Slide 6
PRODUCTIVITY
The level of output that an industry or
company gets from each worker or each
unit of input into its products and
services is called productivity.
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Slide 7
SUPPLY
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Supply Curve
$50
Price
Supply is how much of
a good or service a
producer is willing to
produce at different
prices.
Suppliers are willing to
supply more of a
product or service at a
higher price.
40
30
20
10
10 20 30 40 50
Quantity
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Slide 8
DEMAND
Demand Curve
$50
Price
Demand is an
individual’s need or
desire for a product or
service at a given price.
Individuals are willing to
consume more of a
product or service at a
lower price.
40
30
20
10
10 20 30 40 50
Quantity
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Slide 9
WHEN SUPPLY AND
DEMAND MEET
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Equilibrium Price
$50
Price
The point at which the
supply and demand
curves meet is what is
known as the
equilibrium price and
quantity.
This is the price at
which supply equals
demand.
Supply and
Demand Curves
40
30
20
10
10 20 30 40 50
Quantity
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Slide 10
MARKET STRUCTURE AND PRICES
When a company controls all of a
market, it has a monopoly.
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BUSINESS ACTIVITIES IN
A MARKET ECONOMY
Chapter 3
Slide 11
Production
Marketing
Product
Distribution
Price
Promotion
Management
Finance
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Slide 12
Lesson 3.2
THE CONCEPT OF COST
GOALS
Identify various types of
costs.
Discover how different types
of costs affect the prices
entrepreneurs charge.
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Slide 13
FIXED AND VARIABLE COSTS
Fixed costs are costs that must be paid
regardless of how much of a good or
service is produced.
Fixed costs are also called sunk costs.
Variable costs are costs that go up and
down depending on the quantity of the
good or service produced.
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MARGINAL BENEFIT AND
MARGINAL COST
Chapter 3
Slide 14
Marginal benefit measures the
advantages of producing one additional
unit of a good or service.
Marginal cost measures the
disadvantages of producing one
additional unit of a good or service.
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Slide 15
OPPORTUNITY COST
Opportunity cost is the cost of
choosing one opportunity or investment
over another.
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Slide 16
Lesson 3.3
GOVERNMENT IN
A MARKET ECONOMY
GOALS
Explain the government’s
effect on what is produced.
Recognize the different
roles the government plays
in a market economy.
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GOVERNMENT’S EFFECT ON
WHAT IS PRODUCED
Chapter 3
Slide 17
Purchases
Taxes
Subsidies
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Slide 18
ROLES OF THE GOVERNMENT
Regulator
Inspection
Licenses
Provider of public good
Provider of social programs
Redistributors of income
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