1. Entrepreneurs in a Market Economy!
Chapter 2
Entrepreneurs in a Market Economy!

2. Desert Survival Activity

3. Desert Survival Answers
Unless your team waited at the plane to be rescued you likely perished
because of the heat and lack of water. The experts say these are the most
important items.
1. mirror-signal planes with the reflected sunlight
2. top coat-protection from the sun and warmth at night
3. water-may last 24 hour if you stay still
4. flashlight-a signal at night
5. parachute-visual signal for planes
6. pocket knife-cut cactus for water
7. raincoat-protection from sun and catch rain (unlikely)
8. pistol-a noise signal
9. sunglasses-eye protection from sun
10. first aid kit- treat injuries
11. compass-useless if staying
12. map-useless if staying
13. book-you won’t starve
14. vodka - no use
15. salt-would only make you more thirsty

4. Needs Vs. Wants Needs: things that you must have in order to survive
Wants: Things you think that you must have in order to be satisfied.
The role of business is to produce and distribute goods and services that people need and want.

5. Economic Choices
Economic choices is the process of choosing which needs and wants, among several, you will satisfy using the resources that you have.
Two factors impact this choice:
Scarcity
Opportunity Cost

6. Scarcity
In every economy there are limited resources to produce goods and services.
Individuals, however, have unlimited needs and wants!
Scarcity occurs when peoples wants and needs are unlimited and the resources to meet those needs are limited.
Ex: Land, Cool new toy, Ipad
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7. Opportunity Cost
When trying to satisfy your wants and needs, you most likely will have many alternatives
Opportunity cost is the value of the next- best alternative - the one you pass up.
If you have $500 for a gift. If you choose to put the money in savings for college the opportunity cost could be a laptop you thought about buying.

8. What affects Price?
Supply – The quality of a good or service that a producer is willing to produce at different prices.
Demand – The quantity of a good or service that consumers are willing to buy at a given price.
The point where supply and demand meet is the equilibrium price.

9. Cost of Doing Business
Fixed Costs – costs that must be paid regardless of how much a goods or service is produced.
Rent, insurance, interest on loans.
Variable Costs – Costs that go up and down depending on the quantity of the good or service produced.
Inventory, staffing