Transcript Principles of Business, Marketing, and Finance

Principles of Business, Marketing and
Finance
Lesson Twelve
Supply and Demand in a Private Enterprise System
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Needs and Wants
• Needs are essential
Needs
• Wants add to the quality of life
Wants
Needs &
Wants
• Needs and wants are unlimited
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2
Goods and Services
• Business
– Steel
– Plastic
– Gasoline
– Computers
– Electricity
– Security
– Accounting
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3
Goods and Services
• Consumers
– Watches
– Televisions
– Cell phones
– Vacations
– Service at an
automobile dealership
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4
U.S. Economy
• Largest producer of goods and services in the
world.
• Americans consume more than any other
country.
• America has twice as many shopping malls as it
does high schools.
• Americans use credit to buy now, and pay later.
• High level of demand may stem from the
quantity of goods and services available and the
amount of money businesses spend to
advertise.
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Economic Resources
• Means through which goods and services are
produced – however resources are limited
Natural
Human
Capital
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Basic Economic Problem
• Scarcity
• Choices are based on scarcity
• Economic decision making
-a process of choosing which wants, among several
options will be satisfied
• Trade-off
-when you give up something to have something else
• Opportunity cost
-the value of the next-best alternative that you did not
choose
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Questions Economies Must Answer
What goods and services will be
produced?
How will the goods and services be
produced?
For whom will the goods and services be
produced?
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Economic Systems
• Controlled Economy
-government makes decisions
• Free Economy (Market Economy)
-consumers influence decisions
• Mixed Economy
-some goods and services are provided by the
government and some by private enterprise
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America’s Private Enterprise
Economy
• Based upon independent decisions by
businesses and consumers with limited
government activity to regulate relationships.
•Stimulated by the profit motive.
•Resources of production are
owned and controlled by
individual producers.
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America’s Private Enterprise
Economy
• Individual consumers make decisions about what will be
purchased to satisfy needs.
• Value determines what consumers will purchase.
• Government stays out of the exchange activities.
• Consumers - individuals who purchase products and
services to satisfy needs
• Demand - a relationship between the quantity of a
product consumers are willing and able to purchase and
the price
• Producers - businesses that use their resources to
develop products and services
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America’s Private Enterprise
Economy
• Supply-a relationship between
the quantity of a product that
producers are willing and able
to provide and the price
• Government-allows consumers and producers
to make decisions without any interference
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Microeconomics and Consumer
Demand
Macroeconomics
Microeconomics
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Factors Affecting Demand
• Strength of the need or want
• Available supply of products and services to
satisfy needs
• Availability of alternative products that
consumers believe will satisfy their needs
• Demand Curves
– Relationship between price and the quantity
demanded
– Rising prices result in lower demand
•All of the consumers who will purchase a
particular product or service
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Supplying the Product
• Possibility of profit
• Amount of competition
• Capability of developing and marketing products or
services
• Economic resources
• Supply Curve
– Graphs relationship between price and quantity supplied
– Law of Supply-when price of a product goes down, fewer
products will be produced
• Market Price
-point where supply and demand for a product are equal
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15
The Decision-making Process
Choose one
choice
Identify the
choice
Act on your
choice
Define the
problem
Evaluate
advantages &
disadvantages
Review your
decision
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