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

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1-11-1 Satisfying Needs and Wants

1-21-2 Economic Choices

1-31-3 Economic Systems

1-41-4 Supply and Demand

11C H A P T E R

Economic Decisions Economic Decisions and Systemsand Systems

© 2012 Cengage Learning. All Rights Reserved.SLIDE 2

1-11-1 Satisfying Needs Satisfying Needs and Wantsand 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.


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KEY TERMS

● needs

● wants

● goods

● services

● economic resources


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NEEDS AND WANTS

● Needs are essential

● Wants add to the quality of life

● Needs and wants are unlimited


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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.


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GOODS AND SERVICES

● Goods and services for businesses and consumers

● The U.S. 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.


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ECONOMIC RESOURCES

● Natural resources

● Human resources

● Capital resources

● Resources are limited


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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.


1-21-2 Economic ChoicesEconomic Choices

Goal 1 Understand the basic economic problem.

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


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KEY TERMS

● scarcity

● economic decision-making

● trade-off

● opportunity cost


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1SLIDE 12THE BASIC ECONOMIC PROBLEM

● Choices

● Trade-offs and opportunity costs


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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.


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1SLIDE 14THE 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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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.


1-31-3 Economic SystemsEconomic 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.


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KEY TERMS

● economic system

● command economy

● market economy

● traditional economy

● mixed economy

● capitalism


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1SLIDE 18THE THREE ECONOMIC QUESTIONS

● What to produce?

● How to produce?

● What needs and wants to satisfy?


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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?


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1SLIDE 20TYPES OF ECONOMIC SYSTEMS

● Command economy

● Market economy

● Traditional economy

● Mixed economies


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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.


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1SLIDE 22THE U.S. ECONOMIC SYSTEM

● Private property

● Freedom of choice

● Profit

● Competition


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Checkpoint

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


1-41-4 Supply and Supply and DemandDemand

Goal 1 Describe supply and demand orally and with graphs.

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


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KEY TERMS

● consumer

● producers

● demand

● supply

● market price


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1SLIDE 26PARTICIPATING IN A MARKET ECONOMY

● Consumers set demand

● Producers establish supply

● A graphic view


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DEMAND AND SUPPLY


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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.


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DETERMINING PRICE

● Factors influencing demand

● Factors influencing supply

● Determining market price


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MARKET PRICE


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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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