Entrepreneurs in a Market Economy! Chapter 2 Entrepreneurs in a Market Economy!

Desert Survival Activity

Desert Survival Answers Unless your team waited at the plane to be rescued you likely perished because of the heat and lack of water. The experts say these are the most important items. 1. mirror-signal planes with the reflected sunlight 2. top coat-protection from the sun and warmth at night 3. water-may last 24 hour if you stay still 4. flashlight-a signal at night 5. parachute-visual signal for planes 6. pocket knife-cut cactus for water 7. raincoat-protection from sun and catch rain (unlikely) 8. pistol-a noise signal 9. sunglasses-eye protection from sun 10. first aid kit- treat injuries 11. compass-useless if staying 12. map-useless if staying 13. book-you won’t starve 14. vodka - no use 15. salt-would only make you more thirsty

Needs Vs. Wants Needs: things that you must have in order to survive Wants: Things you think that you must have in order to be satisfied. The role of business is to produce and distribute goods and services that people need and want.

Economic Choices Economic choices is the process of choosing which needs and wants, among several, you will satisfy using the resources that you have. Two factors impact this choice: Scarcity Opportunity Cost

Scarcity In every economy there are limited resources to produce goods and services. Individuals, however, have unlimited needs and wants! Scarcity occurs when peoples wants and needs are unlimited and the resources to meet those needs are limited. Ex: Land, Cool new toy, Ipad https://www.youtube.com/watch?v=9ZOT o1K_Kp0

Opportunity Cost When trying to satisfy your wants and needs, you most likely will have many alternatives Opportunity cost is the value of the next- best alternative - the one you pass up. If you have $500 for a gift. If you choose to put the money in savings for college the opportunity cost could be a laptop you thought about buying.

What affects Price? Supply – The quality of a good or service that a producer is willing to produce at different prices. Demand – The quantity of a good or service that consumers are willing to buy at a given price. The point where supply and demand meet is the equilibrium price.

Cost of Doing Business Fixed Costs – costs that must be paid regardless of how much a goods or service is produced. Rent, insurance, interest on loans. Variable Costs – Costs that go up and down depending on the quantity of the good or service produced. Inventory, staffing