How we get what we want... Economic Principles

What is economics? 4 The study of how people get what they want 4 Includes producing goods and services and getting them to people 4 Money and resources are scarce 4 Governments have systems to care for people 4 Work is required to produce and make money 4 Includes supply, demand, prices & money

Define and describe supply & demand 4 Prices vary with supply of something as related to demand for it 4 Supply and demand work together in setting price 4 Both are limited 4 supply , demand  4 supply ,. demand 

Supply versus Demand 4 Supply –amount of something that is available –can be reduced by disasters –Supply , Price  4 Demand –amount of something that will be bought at a given price –Price  Demand  –price must cover costs of production

How does price effect economics? 4 Price is the amount of money involved in buying and selling a good or service –worth of the item in money

What importance does money play in economics? 4 Money is anything exchanged for goods or services –currency is money used in a country –the value of money is how much it will buy –change in prices can cause change in the value of money

Explain the economic system? 4 Economic system is how people go about doing business – how things are created, owned or exchanged 4 All countries have economic systems just modified in some way to meet their particular needs – capitalism versus communism –major differences are based on property ownership and control

Explain free enterprise? 4 Free enterprise the a way of doing business in the United States –allows for business to work with minimum governmental control –allows people to work and make money for themselves –many people own property

Describe property ownership? 4 Private ownership is having things people can call their own 4 Property is anything with value 4 Types of property –real is land and its natural features –personal is items people personally use

Describe business ownership? 4 A business is a person or group that produces and / or sells goods and services 4 People who own businesses take risks –a risk is the possibility of losing what has been invested –but you also can get benefits from a risk you can make money

What choices are available within free enterprise? 4 You can chose what to produce, but and sell 4 You can set your price and be somewhat flexible 4 Decisions require a lot of information

What kind of control issues are present in free enterprise? 4 Few government controls 4 You can run the business as you chose - but dishonesty is unacceptable 4 Standards are imposed –help keep food clean and measured –people want a full portion of what they pay for

How do consumers effect competition? 4 Businesses must have customers to but goods and services

Who are consumers? 4 Determine what business produce –if consumers won’t but a product it won’t be produced 4 A consumer is a person, business or agency that uses goods and services –all consumers have limited money and must decide how it will be spent

What is competition? 4 Consumers will choose what they like best compared with it’s cost 4 Competition allows consumers to choose between similar products 4 Monopoly exists if one producer controls products and / or products – not good in free enterprise systems 4 Advertising influences what people will buy –never use untruthful advertising

Define entrepreneurship? 4 Creating goods or services to meet a unique need –“new” things 4 An Entrepreneur is a person who takes risks, in creating and developing new products and ways to market them –must be a very creative person with creative ides

Quiz Time!! 4 1.What is economics? 4 2.Define and describe supply and demand? 4 3.How does price affect economics? 4 4.What importance does money play in economics? 4 5.Explain an economic system? 4 6.Explain free enterprise? 4 7.List 3 ways of doing business and explain all 3? 4 8.Who are consumers and what is their role? 4 9. Entrepreneurship important, why?