Unit 1 Needs and Wants Supply and Demand Effects on the Economy

Vocabulary Need Want Goods Service Resource Scarcity Factors of production Economics Equilibrium price Types of economies Inflation Deflation Recession Depression GDP Deficit Debt Surplus Business cycle Ethics Sweatshops OSHA Social Responsibility FDA Equal Pay Act EPA

What is a Need and a Want?

Four Factors of Production /Resources Natural resources Human resources Capital resources Entrepreneurial resources

Scarcity - Do you believe that the world is likely to run out of oil? 2. If we're really not running out of oil, why do so many media reports encourage people to believe we are?

Quiz? What is the meaning of scarcity Name a scarce resource What is a natural resource What is a human resource

Define Economics

The study of how society chooses to use resources to produce and distribute goods and services for people ’ s consumption.

The basis of business is also the study of economics. Businesses look at people ’ s wants and needs and then decide whether to supply the demand.

Supply and Demand in a Market system Supply is controlled by the business Demand is generated by the consumer

Price Quantity Purchased Supply Curve Demand Curve Demand curve is based on price. The higher the price the Lower the amount demanded. Supply curve is based on price. The higher the price the more A business is willing the sell , Equilibrium Price

Types of Economics Systems Command Economy –Communism Socialism Market Economy Mixed Economy

Economies Command - Government controlled 1.Strong – communism – government makes all economic decisions 2. Moderate – socialism – some private business – some government controlled

Free Market - Capitalism, resources are privately held. Mixed – most countries fall under this. Partial use of both free and command.

Will we ever go back to living like this?

Economic Indicators GDP Unemployment Housing Rate of Inflation National Debt

GNP or GDP Both of these indicators reflect the sum of goods and services. GNP - includes profit by businesses operating outside the country- Nike in South America GDP- includes business done by foreign countries inside our borders- Nissan Titan

Five Factors that affect GDP Population Entrepreneurialism Trade War Natural resources

Turn to your neighbor and give them one reason why each of the indicators would be good for the economy. Have your neighbor tell you one reason why that indicator is bad or brings the economy down.

Business Cycle Prosperity Recession Depression Recovery **Book page 40***

Business Ethics and Social Responsibility

Goal of Business is to make a Profits before social welfare? profit. When a business is tempted to put profits before social welfare there is a conflict of interest

What is Business Ethics? Businesses have an ethical obligation to provide safe product, create jobs, protect the environment, and contribute to the standard of living.

Business Ethics Human Relations Hiring Firing Unions Diversity People Factor Land Factor Society Factor Law Factor Govern Regulations Working within the law Operating a business w/ others fairly Environmental Pollution control Recycling Community Involvement Giving to the community Sponsoring events

For any business to be successful, it must operate legally and humanely. Shirtwaist Factory, New York City Sweatshops good or bad? Levi Strauss List under headings companies which act responsibly and/or ethically and those who do not.

Johnson & Johnson 1982 – Tylenol recall $100 mill Ford/Firestone 1999 – Jeep recall Post – Contributes a percentage of purchase to the Boys and Girls Club of America GM – 30% reduction of waste

Boycotts How do boycotts affect supply and demand? Do boycotts help or hurt?

Ways to use ethics in business Quality product at a fair price –Repeat customers – good reputation Follow government regulations –If not – Jail or fines Employee relations –Less dissatisfaction - less turn-over of skilled labor

Government aids for social responsibility FDA – protects consumers from dangerous or falsely advertised products. Equal Pay Act – men and women should be paid the same for doing equal work.

EPA – protects environment and controls pollution OSHA – protects employees from unsafe work environments.

GDP Gross Domestic Product Figured GDP = consumption + gross investment + government spending + (exports − imports) List at __$46,000. ____ Aug 2008

Unemployment Those wanting to work but not finding a job Figured Once month Listed at __5.7%_ August aug 09

Housing Housing contributes to GDP in two basic ways: through private residential investment and consumption spending on housing services. Residential investment includes construction of new single family and multifamily structures, residential remodeling, production of manufactured homes, and brokers’ fees. Consumption spending on housing services includes the amount of rent paid by tenants, the imputed value of housing services to home owners, and the amount paid to hotels by households for housing services. Investors will closely watch the Case-Shiller home prices index. Last month, the index showed home prices in 20 major cities fell a record 15.8% in the past year. Prices were down 18.4% from peak levels seen two years ago.

Inflation Figured- It is measured as an annual percentage increase. As inflation rises, every dollar you own buys a smaller percentage of a good or service. For example, if the inflation rate is 2% annually, then theoretically a $1 pack of gum will cost $1.02 in a year. Rate of__5.6%_ as of July Aug 09

National Debt U.S. NATIONAL DEBT CLOCK The Outstanding Public Debt as of 23 Aug 2008 at 10:22:27 PM GMT is: $ 9, 6 2 2, 3 9 9, 8 0 0, The estimated population of the United States is 304,596,139 so each citizen's share of this debt is $31, The National Debt has continued to increase an average of $1.86 billion per day since September 28, 2007!