Transcript Unit 1: Going Into Business For Yourself

Unit 1: Going Into Business For
Yourself
Chapter 1: What is
Entrepreneurship?
The Main Idea

Entrepreneurship is
the primary catalyst
for economic growth.
To be successful
requires an
understanding of how
the economy works.
Small Business and
Entrepreneurship
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Entrepreneur: individual who undertakes the creation,
organization and ownership of a business. He or she also
accepts the risks and responsibilities
Venture: A new business undertaking that involves risk
Entrepreneurship: the process of recognizing an
opportunity, testing it on the market, and gathering the
necessary resources to go into business
More than 90% of all businesses today are considered
small businesses, with 62% being home-based.
Economic Systems

4 Fundamental
Questions:

What goods and services
should be produced?
What quantity of goods
and services should be
produced?
How should goods and
services be produced?
For whom should goods
and services be produced?
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Free Enterprise System
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People have an important
right to make economic
choices ( the U.S)
– People can choose what
products to buy
– People can choose to own
private property
– People are free to start a
legal business and compete
with other businesses
– Also known as Capitalism
or a Market Economy
The Profit Motive: making a profit is a
primary incentive of free enterprise.
Profit is money left over after all expenses
have been paid.
Competition

Competition is good
for consumers because
it provides choices,
forces improved
quality and efficiency
and leads to a surplus,
which brings prices
down.
Market Structures

Monopoly
a market structure in
which a product has
only one seller who
has total control over
supply and most prices
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Oligopoly
– A market structure in
which there are just a
few competing firms
Basic Economic Concepts

Goods and Services: Goods are tangible
while services are intangible
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Scarcity: occurs when demand exceeds
supply
Ownership
Ownership is powerful
 You can open any business you create
 You can keep all the profits
 It is your choice
 You can sell “shares”
 You can donate
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Supply and Demand
“How Free Enterprise Works”
Laws of Supply and Demand
generally determine the price of a product
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Supply (S): quantities
available to consumers
at various prices
If everything else
remains the same,
businesses will supply
more at higher prices
than at lower ones
As P increases, QS
increases
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Demand (D):quantities
that consumers would be
willing to buy at various
prices.
If everything else remains
the same, people will
demand more at lower
prices than higher ones
As P increases, QD
decreases
Supply graph example
Demand graph example
Market behavior
What happens to the price of air
conditioners in the summer? fall?
 When are bathing suits most expensive?
Why?
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Equilibrium
Also known as Market Clearing Price.
Occurs where the D and S curves meet
Competition
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Keeps prices down
and quality high
The consumer benefits
from competition.
How?
The opposite is called
a monopoly
Summary
Overall, use Supply and Demand as guides
 If D decreases, the market may be telling
you to change your product or lower Price
 If Supply increases, prices may fall
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