1 Foundations of Business In order to appreciate and make informed decisions in the world around them, students will need to establish a basic business/economic foundation.

2 1-4 Economic Resources and Systems Why is understanding economic resources and systems essential to businesses?

3 Opening Questions 1. What resources are used to produce the items that you listed as your wants and needs? 2. Thinking about your list of wants yesterday – what would you be willing to keep and what would you be willing to give up (keep in mind you have limited $$$)

4  Explain Supply  Explain Demand  Identify how supply and demand control price Targets

5 Price goes UP!  How is Price an indication of Scarcity? If something is in short supply But, Demand is high Price will ????? The Market and Price

6 Price  Amount of money given or asked for when goods and services are bought or sold.

7 Law of Demand  Consumers are the ones who provide the demand for the good.  Demand (Curve) Amount or quality of goods and services that consumers are willing to and able to buy at various prices.  Law of Demand People choose to buy more of something at lower prices than at higher prices.

8 Higher Demand Lower Demand Higher Price Lower Price Law of Demand CAUSES

9 Law of Supply  Producers are influenced to supply goods and services by the prices in the market.  Supply (Curve) Amount or quality of goods and services that producers are willing to provide at various prices.  Law of Supply Producers choose to sell more of something at a higher price than at a lower price.

10 Higher Price Lower Price More Supply Less Supply Law of Supply CAUSES

11 How is Price Determined?  Consumers want to get as much as possible for the LOWEST possible price.  Producers want to make as much PROFIT as possible on the items that are produced.  Where is the Happy Medium????

12 Equilibrium Price  The price at which the amount supplied and the amount demanded meet, or come together.

13 Demand Supply Equilibrium Price

14 The Market and Price  Surplus Over supply of a product. Consumer demand is lower than the amount supplied  What will happen to the price when the seller sees that there is a SURPLUS? Price will go ???? until it hits the equilibrium price.

15 The Market and Price  Shortage: Under supply of a product. Consumer demand is higher than the amount supplied  What will happen to the price when the seller sees that there is a SHORTAGE? Price will go ???? until it hits the equilibrium price.

16  Explain the Law of Supply and Law of Demand. Law of Supply – Producers choose to sell more of something at a higher price than at a lower price Law of Demand – Consumers choose to buy more of something at a lower price than at a higher price  Discuss how prices are determined (Equilibrium Price) Price at which the amount supplied and the amount demanded meet Targets Review