Understand the role of business in the global economy. Essential Standard 1.00 Understand the role of business in the global economy.

Understand economic systems. Objective 1.01 Understand economic systems.

Topics Satisfying needs and wants Basic economic problem Six steps of economic decision-making Main types for economic systems Market economy self-regulating principles

Satisfying Needs and Wants

Satisfying Needs and Wants What are needs? What are wants? Needs are required in order to live. Wants are things that add comfort and pleasure to your life.

Satisfying Needs and Wants continued What are goods? What are services? The United States economy is the largest producer of goods and services in the world. Goods are things that you can see and touch. Services are activities that are consumed at the same time they are produced.

Satisfying Needs and Wants continued How do businesses use economic resources to produce goods and services? The types of economic resources are: Natural Human Capital Economic resources, also called factors of production, are the means through which goods and services are produced.

Satisfying Needs and Wants continued What are natural resources? Many natural resources are nonrenewable. What are human resources? Natural resources are raw materials produced by nature. Human resources are the people who contribute physical and mental energy to the production process.

Satisfying Needs and Wants continued What are capital resources? Capital resources are the tools, equipment, and buildings that are used to produce goods and services.

Satisfying Needs and Wants continued What is the basic economic problem? What is scarcity? The basic economic problem exists due to limited resources for satisfying unlimited needs and wants. Scarcity is not having enough resources to satisfy the unlimited needs and wants. The scarcity of resources for satisfying needs and wants influences choices.

Satisfying Needs and Wants continued What is the purpose of economic decision-making? What happens to choices in a tradeoff? What is opportunity cost ? Economic decision-making is the process of choosing which wants, among several options, will be satisfied. Tradeoff is the process of giving up something for gaining something else. Opportunity cost is the value of the next-best alternative that you did not choose.

Six steps of economic decision-making

Economic Decision-Making What is economic decision-making? What are the six steps of economic decision-making? Defining the problem Identifying choices Evaluating the advantages and disadvantages of each choice Choosing one choice Acting on the choice Reviewing the decision Economic decision-making is a means of choosing a course of action among several alternatives.

Economic Decision-Making continued Try to solve a problem Problem: Adjust the foundation of a house Choices: Ignore the problem Contact companies located in the same city Contact companies located in the next city Contact companies located in other cities What choice would you make?

Economic Decision-Making continued Some advantages: location of local companies, companies that guarantee of services, and companies that provides simple explanation of necessary services Some disadvantages: prices for services and location of company in next city or other cities

Economic Decision-Making continued Choosing one choice: A local company that guarantees services and provides simple explanation of services. Acting on choice: Schedule for local company to provide services of adjusting foundation of house. Reviewing decision: Routinely check on condition of foundation of house.