Work as a team Discuss NEEDs and WANTs that you have. Label (Need or Want) Do you have a difficult time telling difference between a Need and Want? Does PEER PRESSURE make it more difficult to distinguish between a Need & Want?

Entrepreneurs Satisfy Needs & Wants …Do You Want It or Need It?... “Dad, I really need a new pair of shoes to wear to the Prom,” said Rachel. “Do you Need a new pair of shoes, or do you Want a new pair?” her father responded. “Want or Need – what’s the difference?” Rachel replied. Rachel’s father paused as he thought about the valuable lesson he could teach his daughter and then said, “That’s a good question, Rachel. Let’s look at it this way. Do you really Need the shoes in order to survive, or will having the new shoes make you feel better?” Rachel thought about what her father asked and said, “Well, Dad it won’t keep me from going to the dance if I don’t have the new shoes, but I’d sure like to have new shoes to go with my new dress. So, I guess I’d have to answer you by saying they would make me feel better.” Then you Want the shoes, but you don’t Need them!” her father responded. That’s what economics is all about!” “Oh, Dad you always try to teach me something even when I just want a new pair of shoes!”

Satisfying a N/W is what business is all about. http://prezi.com/dmtdrhws_ofw/needs-vs-wants-quick-lesson/ …Introduction to Needs/Wants… A quick lesson, as teens, our concept of money and spending that money may need a little coaching before we are ready for adulthood and beyond…

ENTREpreneurs in a Market economy Lesson 2.1 – Entrepreneurs Satisfy Needs & Wants Lesson 2.2 – How Economic Decisions Are Made Lesson 2.3 – What Affects Price?

Entrepreneurs Satisfy Needs and Wants Lesson 2.1 Entrepreneurs Satisfy Needs and Wants Is It a Need or a Want? NEED – must have in order to survive… food, clothing, shelter Abraham Maslow – Hierarchy of Needs (5 areas) Self-Actualization Esteem Social Security Physiological – (most basic), must be satisfied first before WANT – things you think you must have to be satisfied, comfort Economic – involve a desire for Material goods/services. Basis of an economy; clothing, housing, cars, hair styling Noneconomic – desire for Nonmaterial things sunshine, fresh air, exercise, friendship, and happiness Needs and Wants are UNLIMITED…

Economic Resources Means through which G/S are produced Factors of Production – Economic Resourses Natural Resources – raw materials supplied by nature Human Resources – people who create the G/Svc Capital Resources – assets invested in production of G/S LIMITED RESOURCES – all have a limited supply Individuals, Businesses, & Countries compete for access to & ownership of www.gasbuddy.com

ROLE of Entrepreneurs in the U.S. Economy… Entrepreneurs are the backbone of the U.S. economy. ROLES: SUPPLY and DEMAND CAPITAL INVESTMENT and JOB CREATION, CHANGE AGENTS

Lesson 2.2 How economic decisions are made Economic Systems – all answer 3 basic questions: What G/S will be produced? How will the G/S be produced? What N/W will be satisfied with the G/S produced? ECONOMIC SYSTEMS: COMMAND Economy – gov’t MARKET Economy – individuals/businesses TRADITIONAL Economy – simple, tradition, less developed MIXED Economy – Command & Market mixed.

The U.S. ECONOMIC SYSTEM Based on 4 Basic Principles: PRIVATE PROPERTY Best described as a Market Economy Based on 4 Basic Principles: PRIVATE PROPERTY FREEDOM OF CHOICE PROFIT COMPETITION

How Economic Decisions Are Made …CHOOSE BETWEEN ALTERNATIVES… “Anna, weren’t you thinking about buying a new iPhone 5 last week?” his dad asked. “Yes, Dad I was,” Anna replied, “but if I buy the new shoes I want for the Prom, I won’t have enough money to buy the iPhone 5 now.” You’ve just learned a lesson about Opportunity Cost,” his dad said. “What’s that?” Anna asked. His dad explained that when you choose one item over another, the Opportunity Cost is the value of the item you gave up (The Next Best Alternative)– in this case, the iPhone 5. “I understand, Dad. But if you took this opportunity to buy the shoes for me, then I wouldn’t have any opportunity cost, would I?”

Think of some choices that you have made recently… Have you ever selected 1 item over another? What influenced your decision? When you choose one item over another there is an opportunity cost involved.

ECONOMIC CHOICES Economic Decision Making – process of choosing which N/W you will satisfy using resources you have. 2 Factors commonly enter into Econ. Decision Mkg SCARCITY – occurs when N/W are unlimited & resources for G/S are limited. Affects what’s Produced, & How much it Costs OPPORTUNITY COST – value of the next best alternative (the one you passed on)

With Limited Resources you have to make Choices/Trade-offs WHAT WOULD YOU DO? You have $100.00 and need to decide how to spend it. What Choices will you make with your Limited Resources? Gas $35.00 Car Insurance $35.00 Cell Phone Bill $30.00 Outting w/ Friend(s) $20.00 Date Night (Dinner & Movie) $ 50.00

FUNCTIONS OF BUSINESS (Business Activities) Knowledge of these will help satisfy customers & make profit. PRODUCTION – creates and obtains p/s for sale MARKETING – marketing activities – Marketing Mix ,PPDP MANAGEMENT – develop, implement, evaluate, solve problems FINANCE – determine capital needed, how to obtain it, & Involves planning & managing financial records

…Does SUPPLY Match DEMAND… What Affects Price? …Does SUPPLY Match DEMAND… “Well, Dad, I went I the mall today to buy my new shoes and nobody had the ones I wanted,” I’Jaaz told his father. “Every store I went to said it had sold out of the shoes because they were on sale. The manufacturer is suppose to send another shipment of the shoes next week.” “Oh,” his dad said, “so more people want the shoes because the price is lower. And the manufacturer is willing to make more shoes even at the lower price because it is still making a profit. This is the law of supply and demand at work,” “Dad, there you go again – always trying to make a point!”

Work as a team Think of a product that you have wanted In the U.S. economy, you have many choices, but sometimes you might not be able to find exactly what you want. Think of a product that you have wanted to buy could not find….. Why do you think you could not find it?

Lesson 2.3 What affects price? HOW MUCH IS ENOUGH? Consumers & producers determine quantities & prices of G/S produced SUPPLY and DEMAND Supply – Supply Curve Demand – Demand Curve: Demand Elasticity – IS Affected… Inelastic Demand – Little Affect… When Supply and Demand MEET… Equilibrium Price and Quantity – SUPPLY = DEMAND

Supply – Supply curve Supply – How much of a G/S a Producer/Supplier is willing to Produce/Supply at Different Prices. As the Price INCREASES, Suppliers/Producers are willing to Provide MORE. $ Quantity

Demand – demand curve Demand – individuals need/desire for a product/service at a given price. As Price DECREASES, we Purchase MORE. $ Quantity Demand Elasticity – demand Is Affected by Price. Inelastic Demand – change in price creates Little change in demand.

Equilibrium Price & Quantity When SUPPLY and DEMAND Meet. PRICE where SUPPLY = DEMAND, ideal price & quantity $ Equilibrium Price & Quantity Quantity If priced Above EP&Q, Price is too high, If priced Below EP&Q, Price is too low

SUPPLY and DEMAND Online Game: www.shmoop.com

COSTS of Doing Business FIXED Costs – must be paid regardless of how much is produced… VARIABLE Costs – Up/Down depends on quantity produced Which is a Higher Risk? Marginal BENEFIT – Advantages of 1 additional… Marginal COST – Disadvantages of 1 additional… Is Benefit > Cost?

MARKET STRUCTURE and PRICES Market structure is determined by the nature and degree of competition among businesses that operate in the same industry. Each market structure has an effect on the prices businesses can charge for their products or services. PERFECT – Large #, Identical Products, Price is Factor MONOPOLISTIC – Lg # Independent, somewhat diff. OLIGOPOLY – Small #, Majority of total sales revenue MONOPOLY – Only 1 provider