1. Importance of Entrepreneurship in the Economy

2. Vocabulary Capital Capitalism Command economy Demand Demand curve
Economic system
Economics
Economics of one unit
Economy
Enterprise
Equilibrium point
Equilibrium price
Equilibrium quantity
Free enterprise system
Market economy
Mixed economy
Nonprofit organization
Profit motive
Scarcity
Supply
Supply and demand curve
Supply curve
Voluntary exchange
Vocabulary

3. What is an Economic System?
Economics – a social science concerned with how people satisfy their demands for goods (things you can buy) and services (things people do for a fee) when the supply of those goods and services is limited.
Scarcity – not enough to meet the demand
Economic system or economy – method used by society to allocate goods and services amongst its people and to cope with scarcity.
What is an Economic System?

4. Fundamental Questions of Economics
What goods are produced?
What quantity of goods and services are produced?
How are goods and services produced?
For whom are goods and services produced?

5. .
What is an economic system?

6. Types of Economic Systems
The Market
Economy
The Command Economy
Types of Economic Systems

7. Government controls the production, allocation,and prices of goods and services.
Associated with socialism and communism
China, Russia, Iran, Haiti, Cuba, Vietnam, North Korea, Guyana, Venezuela, Zimbabwe, Angola, Republic of Congo, and the Central African Republic.
Entrepreneurship?
The Command Economy

8. Suppliers and consumers control the production, allocation, and prices of goods and services.
Prices responsive to consumer demand.
Voluntary exchange
Free enterprise system
Enterprise = Business
Capital = cash and goods a business owns
Capitalism – free to own and trade goods and invest cash in businesses.
The Market Economy

9. What are three types of economic systems?.
What are three types of economic systems?

10. Supply and Demand

11. The quantity of goods and services a business is willing to sell at a specific price and specific time
Supply

12. Supply curve shows the quantity of a product or service a supplier is willing to sell across a range of prices over a specified time.
Why is a supplier
willing to provide
greater quantities as
the selling price
increases?
Supply Curve

13. A demand curve shows the quantity and price relationship acceptable to consumers.
Why is the demand curve
sloping in a different
direction than the supply
curve?
Demand Curve

14. Supply and Demand Curve
Shows relationship between price and the quantity of a product or service that is supplied and demanded.
Equilibrium point –
supply and the demand are balanced.
Equilibrium quantity –
if supplier produces
more than the
equilibrium quantity,
there will be a surplus.
Less = shortage.
Equilibrium price –
price buyers are
willing to accept.
Supply and Demand Curve

15. What is a supply and demand curve?.
What is a supply and demand curve?

16. Competition in a Market Economy
Competition between suppliers - lower price > consumers buy from that supplier > competition pushes prices downward.
Another benefit – encourages innovation and variety.
Competition between consumers – customers willing to pay any price for item > pushes prices higher.
Competition in a Market Economy

17. Incentive that encourages entrepreneurs to take business risks in order to make a profit.
Benefits of Profit:
Build wealth
Grow the business
Save for slow times.
Profit Motive

18. Calculation of the profit (or loss) for each unit of sale made by a business.
One Unit = one item, one box, one haircut, one hour.
Unit of sale has a selling price and an expense to the entrepreneur.
Selling price – Expense = Profit (or Loss)
(Profit/Selling Price) x 100 = Profit %
Economics of One Unit

19. An entrepreneur buys plain backpacks and decorates them at home with hand drawn art, stitching, buttons, and stickers before reselling them at the flea market for $25.00 each.
Because each backpack is different,
the entrepreneur uses an average
backpack as the unit of sale.

20. The expenses to the entrepreneur per unit of sale are:
Plain backpack……………………………………$11.00
Ink, thread, buttons, etc……………………………$3.00
Labor………………………………………………$6.00
Expenses per unit of sale………………………....$20.00
________________________________________________
The economics of one unit of sale are:
Selling price per unit of sale……………………..$25.00
Expenses per unit of sale……………………….- $20.00
Profit per unit of sale…………………………….$5.00
The profit as a percentage of sales is:
Profit per unit of sale x $5.00 x 100 = 20%
Selling price per unit of sale $25.00

21. Nonprofit Organization
Operate solely to serve the good of society
Not governmental organizations
$$$ come from donations, government grants, or the sales of goods to consumers.
Profits are not to be used for personal gain.
Nonprofit Organization