1-1 Satisfying Needs and Wants 1-2 Economic Choices 1-3 Economic Systems 1-4 Supply and Demand

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e

C H A P T E R 1SLIDE 1

1-1 Satisfying Needs and Wants1-2 Economic Choices1-3 Economic Systems1-4 Supply and Demand

1C H A P T E R

Economic Decisions and Systems

© 2012 Cengage Learning. All Rights Reserved.SLIDE 2

1-1 Satisfying Needs and Wants

Goal 1 Explain the difference between needs and wants.

Goal 2 Distinguish between goods and services.

Goal 3 Describe the types of economic resources.



KEY TERMS

● needs● wants● goods● services● economic resources



NEEDS AND WANTS

● Needs are essential to your life● Wants add to the quality of life● Needs and wants are unlimited● Examples?● Different for you and your parents?



Checkpoint

● What is the difference between a need and a want? ● 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.



GOODS AND SERVICES

● What is the difference?● Goods are manufactured and sold● Services are provided

● You purchase and use services to satisfy your wants and needs, but unlike goods, businesses must provide services to you at the time you want to consume them.


C H A P T E R 1

The U.S. economy● The largest producer

● More than the next two combined● China and Japan

● Also the largest consumer● Largest consumer of oil● More than the next four combined

● Why did this happen?● Shift from agricultural to an industrial economy

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Checkpoint

● How do people satisfy their wants and needs? ● People satisfy their wants and needs by

purchasing and consuming goods and services.



ECONOMIC RESOURCES● Natural resources

● Raw materials provided by mother nature● Human resources

● People who produce goods and services● Capital resources

● Equipment and money used in production● Resources are limited



Checkpoint

● What are the three types of economic resources? Give an example of each type.● 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.


1-2 Economic Choices

Goal 1 Understand the basic economic problem.

Goal 2 Explain the steps in the decision-making process.



KEY TERMS

● scarcity● economic decision-making● trade-off● opportunity cost


C H A P T E R 1SLIDE 13THE BASIC ECONOMIC

PROBLEM● What is the Basic Economic Question?

● Unlimited wants and needs VS limited economic resources

● Scarcity● Not having enough resources to satisfy every

need


C H A P T E R 1

Economic Decision Making● The process of choosing which needs and

wants will be satisfied● Choices

● Scarcity forces you to make decisions among the alternatives

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C H A P T E R 1Trade-offs and opportunity costs● Trade-offs

● When you give up something to have something else

● Opportunity Cost● The value of the next-best alternative that you

were not able to choose● Examples?

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Checkpoint

● What is opportunity cost?● 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.


C H A P T E R 1SLIDE 17THE DECISION-MAKING

PROCESS1. 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.



Checkpoint ● What are the six steps in the decision-making

process?● Define the problem.● Identify the choices.● Evaluate advantages and disadvantages of each

alternative.● Choose one.● Act on your choice.● Review your decision.


1-3 Economic Systems

Goal 1 Identify the three economic questions.

Goal 2 Differentiate among the main types of economic systems.

Goal 3 Describe the economic system of the United States.



KEY TERMS

● economic system● command economy● market economy● traditional economy● mixed economy● capitalism


C H A P T E R 1SLIDE 21THE THREE ECONOMIC

QUESTIONS● What to produce?● How to produce?● What needs and wants to satisfy?● How are they different in different

countries?



Checkpoint

● What are the three economic questions? ● 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?


C H A P T E R 1SLIDE 23TYPES OF ECONOMIC

SYSTEMS● Command economy

● Resources are owned and controlled by the government of the country

● Market economy● Resources are owned and controlled by the

people of the country


C H A P T E R 1SLIDE 24TYPES OF ECONOMIC

SYSTEMS● Traditional economy

● Goods and services are produced the way it has always been done.

● The traditional economy is used in countries that are less developed

● Mixed economies● Combines elements of the command and

market economies



Checkpoint

● What are the main differences among the three economic systems?● The main differences among the economic

systems are found in the ways in which the three economic questions are answered.


C H A P T E R 1SLIDE 26THE U.S. ECONOMIC

SYSTEM● Capitalism● Based on four principles

● Private property● Freedom of choice● Profit● Competition



Checkpoint

● Name the four principles of the U.S. economic system.● Private property● Freedom of choice● Profit● Competition


1-4 Supply and Demand

Goal 1 Describe supply and demand orally and with graphs.

Goal 2 Discuss how supply and demand affect prices of products and services.



KEY TERMS

● consumer● producers● demand● supply● market price


C H A P T E R 1SLIDE 30PARTICIPATING IN A MARKET

ECONOMY● Consumers set demand● Producers establish supply● Between the two, a market price is set● A graphic views



DEMAND



SUPPLY



Checkpoint ● How does the price of a product affect

demand and supply?● 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.



DETERMINING PRICE

● Factors influencing demand● Need, available substitutes

● Factors influencing supply● Competition● Natural Disaster

● Determining market price● The point where supply and demand are

equal



MARKET PRICE



Checkpoint

● How is the market price for a product determined?● 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.

1-1 Satisfying Needs and Wants 1-2 Economic Choices 1-3 Economic Systems 1-4 Supply and Demand

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