Transcript Chapter 1 PowerPoint

Intro to Business, 7e
CHAPTER 1
Economic Decisions
and Systems
1-1
Satisfying Needs and Wants
1-2
Economic Choices
1-3
Economic Systems
1-4
Supply and Demand
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Intro to Business, 7e
1-1 Satisfying Needs
and Wants
Goals
 Explain the difference between needs and
wants.
 Distinguish between goods and services.
 Describe the types of economic resources.
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Intro to Business, 7e
Chapter 1
Key Terms
needs
wants
goods
services
economic resources
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Intro to Business, 7e
Chapter 1
NEEDS AND WANTS
Needs are essential
Wants add to the quality of life
Needs and wants are unlimited
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Intro to Business, 7e
Chapter 1
Checkpoint >>
What is the difference between a need and a want?
Answer
 Needs are those things required to live, such as food,
clothing, and shelter.
 Wants are things that add comfort and pleasure to our lives
such as television, music CDs, and movies.
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Intro to Business, 7e
Chapter 1
GOODS AND SERVICES
Goods and services for businesses and
consumers
The U.S. economy
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Intro to Business, 7e
Chapter 1
Checkpoint >>
How do people satisfy their wants and needs?
Answer
 People satisfy their wants and needs by purchasing and
consuming goods and services.
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Intro to Business, 7e
Chapter 1
ECONOMIC RESOURCES
Natural resources
Human resources
Capital resources
Resources are limited
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Intro to Business, 7e
Chapter 1
Checkpoint >>
What are the three types of economic resources?
Give an example of each type.
Answer
 Natural: water, land, trees, animals, and minerals.
 Human: labor (people who run farms and factories, transport
goods, provide services, or manage businesses).
 Capital: money, land, buildings, tools, and equipment.
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Intro to Business, 7e
1-2 Economic Choices
Goals
 Understand the basic economic problem.
 Explain the steps in the decision-making
process.
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Intro to Business, 7e
Chapter 1
Key Terms
scarcity
economic decision-making
tradeoff
opportunity cost
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Intro to Business, 7e
Chapter 1
THE BASIC ECONOMIC
PROBLEM
Choices
Tradeoffs and opportunity costs
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Intro to Business, 7e
Chapter 1
Checkpoint >>
What is opportunity cost?
Answer
 Opportunity cost is the value of the next best alternative that
you don’t choose.
 It is what you are willing to give up in order to have your first
choice.
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Intro to Business, 7e
Chapter 1
THE DECISION-MAKING
PROCESS
1. Define the problem.
2. Identify the choices.
3. Evaluate the advantages and disadvantages
of each choice.
4. Choose one.
5. Act on your choice.
6. Review your decision.
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Intro to Business, 7e
Chapter 1
Checkpoint >>
What are the six steps in the decision-making process?
Answer
1. Define the problem.
2. Identify the choices.
3. Evaluate advantages and disadvantages of each alternative.
4. Choose one.
5. Act on your choice.
6. Review your decision.
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Intro to Business, 7e
1-3 Economic Systems
Goals
 Identify the three economic questions.
 Differentiate among the main types of
economic systems.
 Describe the economic system of the United
States.
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Intro to Business, 7e
Chapter 1
Key Terms
economic system
command economy
market economy
traditional economy
mixed economy
capitalism
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Intro to Business, 7e
Chapter 1
THE THREE ECONOMIC
QUESTIONS
What to produce?
How to produce?
What needs and wants to satisfy?
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Intro to Business, 7e
Chapter 1
Checkpoint >>
What are the three economic questions?
Answer
 What goods and services will be produced?
 How will the goods and services be produced?
 What needs and wants will be satisfied with the goods and
services?
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Intro to Business, 7e
Chapter 1
TYPES OF ECONOMIC
SYSTEMS
Command economy
Market economy
Traditional economy
Mixed economies
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Intro to Business, 7e
Chapter 1
Checkpoint >>
What are the main differences among the three
economic systems?
Answer
 The main differences between the economic systems are
found in the ways in which the three economic questions are
answered.
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Intro to Business, 7e
Chapter 1
THE U.S. ECONOMIC
SYSTEM
Private property
Freedom of choice
Profit
Competition
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Intro to Business, 7e
Chapter 1
Checkpoint >>
Name the four principles of the U.S. economic system.
Answer
 Private property
 Freedom of choice
 Profit
 Competition
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Intro to Business, 7e
1-4 Supply and Demand
Goals
 Describe supply and demand orally and with
graphs.
 Discuss how supply and demand affect prices
of products and services.
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Intro to Business, 7e
Chapter 1
Key Terms
consumer
producers
demand
supply
market price
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Intro to Business, 7e
Chapter 1
PARTICIPATING IN A
MARKET ECONOMY
Consumers set demand
Producers establish supply
A graphic view
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Intro to Business, 7e
Chapter 1
DEMAND AND SUPPLY
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Intro to Business, 7e
Chapter 1
Checkpoint >>
How does the price of a product affect demand and supply?
Answer
 As prices decrease, the number of consumers willing and able
to purchase the product (demand) will increase.
 As prices increase, businesses will be willing to supply larger
quantities of the product.
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Intro to Business, 7e
Chapter 1
DETERMINING PRICE
Factors influencing demand
Factors influencing supply
Determining market price
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Intro to Business, 7e
Chapter 1
MARKET PRICE
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Intro to Business, 7e
Chapter 1
Checkpoint >>
How is the market price for a product determined?
Answer
 Supply, demand, and competition determine the market price
for a product or service.
 The market price is the point at which supply and demand are
equal.
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