1. Introduction to Business
In order to appreciate and make informed decisions in the world around them, students will need to establish a basic business/economic foundation.
Updated July 2012

2. CH 1 Economic Decisions and Systems
How are business decisions affected by consumer behavior?

3. Opening Questions Things I need to survive include ______.
Things I want to have include ________.
Where do you like to shop? Go out to eat? Go for entertainment?
How do companies get your business?
What is the whole motivation behind running a business?

4. Chapter 1 Targets Explain the difference between wants and needs.
Explain the difference between goods and services.
Describe how limited resources relate to wants.
Describe basic economic problem and decision making
Explain the different types of economies
Define Motivation, competition, and profit

5. Wants Vs. Needs WANTS: Things we wish we could have
We do NOT have to have them to survive.
Public/Private
NEEDS:
Necessary wants
Things we MUST have to survive

6. FYI Goods Vs. Services SERVICES: Task that people or machines perform.
Things that can be physically weighed or measured.
SERVICES:
Task that people or machines perform.
Usually to satisfy a want
More people work in jobs that provide services than jobs that produce goods.
FYI

7. Calculate Buying Power
GDP = Gross Domestic Product
Use exchange rate of all the finished goods and services produced within a country's borders in a specific time period
PPP or PPP GDP = Purchasing Power Parity
Take into account that one dollar can buy more in some countries and less in others.
It is a better gauge of the internal size of each market

8. Buying Power 1 2 3 4 5 6 7 8 9 10 USA $14,624,180,000,000 China
Ranking
Country
Amount in PPP GDP 1
USA
$14,624,180,000,000 2
China
10,084,370,000,000 3
Japan
4,308,630,000,000 4
India
4,001,100,000,000 5
Germany
2,932,040,000,000 6
Russia
2,218,760,000,000 7
Brazil
2,181,680,000,000 8
United Kingdom
2,181,070,000,000 9
France
2,146,280,000,000 10
Italy
1,771,140,000,000

9. Economic Resources or Natural Resources
Anything that people can use to make or obtain what they need or want.
Natural Resources
Human Resources
Capital Resources
Unlimited Wants vs. Limited Resources
Limits the number of wants you can satisfy

10. Motivation Forces that causes action Decision-Making Process
Choices = trade off or Opportunity Cost
Decision-Making Process
Define the problem
Identify the choices
Evaluate the advantages and disadvantages of each choice
Choose the best alternative
Act on your choice
Review your decision

11. Motivation in a persona and business
Needs / Wants
Profit
Money left over after expenses are paid
Biggest motivation for taking the RISK
Competition

12. 3 Economic Questions What goods and services will be produced?
How will the goods and services be produced?
What needs and wants will be satisfied with the goods and services produced?
The word MARKET derives from the Latin Word Mercari which means “TO TRADE.”

13. Economies – method country uses to answer economic questions
Command
Market
Traditional
Mixed

14. Command (Planned or Managed)
A central authority makes the key economic decisions.
Government
Strong Command
Communism (State makes all the decisions)
North Korea, Cuba
Moderate Command
Socialism
Some form of private enterprise
State owns major resources (airports, steel, utilities)
France, Sweden, Canada

15. Market Economy
Economic decisions are made in the marketplace according to the laws of supply and demand
People have the right to:
Own Property
Start a business
Make Agreements (Contracts)
Compete in a Marketplace
Place where buyers and sellers exchange goods and services for some form of money.

16. Traditional Simple economics, no global competition
Goods & services produced way it always has been done

17. Mixed Combination of a market and command economy. USA
State takes care of people’s needs
Marketplace takes care of people’s wants.
USA
Government
Defense, Education
Marketplace
Business

18. Your Roles in the Economy
Consumer
Selects, purchases, uses goods or services
Producer
Who works/owns a business to earn money
Citizen
Vote and participate in government
About 2/3rd of the dollars teenagers spend is their own money earned from jobs or received as gifts and allowances.
FYI

19. Chapter 1 Target Review
Explain the difference between wants and needs.
Wants – Things we which we could have
Needs – Things we MUST have to survive
Explain the difference between goods and services.
Goods – Things that can be physically weighed or measured
Services – Tasks that people or machines perform
Describe how limited resources relate to wants.
Limited resources limit the number of wants people can satisfy

20. Activity Think of the last ‘big’ purchase you made.
Write out the Decision Making process you went through:
Define the problem
Identify the choices
Evaluate the advantages and disadvantages of each choice
Choose the best alternative
Act on your choice
Review your decision