1. Entrepreneurs in a Market Economy2
Entrepreneurs in a Market Economy
2.1 Entrepreneurs Satisfy Needs and Wants
2.2 How Economic Decisions are Made
2.3 What Affects Price?

2. Ideas in Action Web Site Design
Scott Smigler, founder of Exclusive Concepts, Inc., developed his business while still in high school.
Together with Eric Golden, Scott founded the Bentley Entrepreneur Society to help students who are interested in Entrepreneurship.
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3. Important business lessons Scott has learned include:
Perseverance
Mentorship
Communication
Capitalization
Marketing
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4. Lesson 2.1 Entrepreneurs Satisfy Needs and Wants
Goals
Distinguish between needs and wants.
Describe the types of economic resources.
Describe the role of entrepreneurs in the U.S. economy.
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5. Terms
needs
wants
economic resources
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6. Is It a Need or a Want? needs wants
things that are necessary for survival
wants
things you think you must have in order to be satisfied
add comfort and pleasure to your life
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7. The role of business is to produce and distribute goods and services that people need and want.
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8. Needs Maslow’s hierarchy of needs states that:
People’s basic psychological needs must be satisfied before they can focus on higher level needs.
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10. needs
vary from individual to individual
vary by situation
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11. Wants economic wants noneconomic wants
a desire for material goods and services
are the basis of an economy
clothing
housing
hairstyling
noneconomic wants
nonmaterial things
sunshine
fresh air
happiness
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12. Needs and Wants are Unlimited
Needs and wants are infinite.
Satisfying one need or want may trigger a new need or want.
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13. What is the difference between needs and wants?
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14. Economic Resources economic resources goods services
the means through which goods and services are produced
goods
products you can see and touch
services
activities that are consumed as they are produced
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15. Entrepreneurs use economic resources to create the goods and services consumers use.
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16. Factors of Production natural resources human resources
raw materials supplied by nature
human resources
the people who create goods and services
capital resources
the assets invested in the production of goods and services
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17. Limited Resources Economic resources are limited.
Individuals, businesses, and countries compete for resources.
High demand for a limited resource drives up the price for the resource.
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18. List the three types of economic resources and give an example of each.
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19. Role of Entrepreneurs in the U.S. Economy
Entrepreneurs are the backbone of the U.S. economy.
The development of small businesses helps to ensure a strong economic future.
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20. Supply and Demand
Entrepreneurs look for unmet needs to satisfy consumer needs and wants.
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21. Capital Investment and Job Creation
Entrepreneurs contribute to their local communities through:
investment
job creation
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22. Change Agents The creation of new products can:
change the way people live
alter the way people conduct business
As entrepreneurs create more goods and services, the needs and wants of consumers increase.
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23. What are some things entrepreneurs contribute to the U.S. economy?
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24. Lesson 2.2 How Economic Decisions are Made
Goals
Compare and contrast different types of economic systems.
Describe the characteristics of the U.S. economy.
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25. Explain how scarcity affects economic decisions.
Explain how business functions are used to satisfy consumers.
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26. Terms capitalism profit economic decision making scarcity
opportunity cost
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27. Economic Systems
Each economy must answer three basic questions regarding goods and services:
Which ones will be produced?
How will they be produced?
What needs and wants will they satisfy?
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28. A variety of economic systems exist.
Command Economy
Production decisions are made by the government.
Few choices exist in the marketplace.
Market Economy
Production decisions are made by individuals and businesses.
Ample choices exist in the marketplace.
Entrepreneurship thrives in a market economy.
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29. Traditional Economy Mixed Economy
Production occurs the way it has always occurred.
Most production is consumed.
Left over production is sold or traded.
Countries with traditional economies are not participating in the global economy.
Mixed Economy
These economies contain elements of command and market economies.
Sometimes these economies occur because a country is shifting from either a command or traditional economy toward a market economy.
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30. communism a command economic system
government-led plans direct resources toward economic growth
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31. How does the type of economy affect the way the basic economic questions are answered?
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32. The U.S. Economic System capitalism
the private ownership of resources by individuals rather than by the government
individual businesses and consumers make the majority of production decisions
also called free enterprise
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33. The U.S. economic system of capitalism is based on four economic principles.
Private Property
You may own whatever you want as long as you operate within the law.
Freedom of Choice
Government intervention occurs only when individual decisions will bring harm to others.
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34. Profit
the difference between the revenues taken in by a business and the costs of operating the business
The opportunity to earn a profit is at the heart of the free-enterprise system.
Competition
the rivalry among businesses to sell their goods and services
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35. Describe the four basic principles of the U.S. economic system.
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36. Economic Choices economic decision making
the process of choosing which needs and wants, among several, you will satisfy using the resources you have
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37. Scarcity Opportunity Cost
occurs when there are limited resources available to meet the unlimited needs and wants of consumers
Scarcity forces you to make decisions about tradeoffs.
Opportunity Cost
the value of the next-best alternative (the one you pass up)
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38. What factors affect economic choices?
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39. Functions of Business Production
A profit is earned by selling products or services to consumers.
The production function creates or obtains products or services.
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40. Marketing
The goal of marketing is to attract as many consumers as possible.
The marketing mix includes:
product
distribution
price
promotion
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41. Management The duties of management include: setting goals
deciding on responses to competition
solving problems
managing employees
evaluating business activities
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42. Finance Financial duties include: determining capital requirements
determining capital resources
managing the financial aspects of the business
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43. What are the functions of business?
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44. Lesson 2.3 What Affects Price?
Goals
Explain how supply and demand interact to determine price.
Describe how costs of doing business affect the price of a good or service.
Explain the effect of different market structures on price.
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45. Terms supply demand equilibrium price and quantity fixed costs
variable costs
marginal benefit
marginal cost
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46. How Much Is Enough? supply demand
how much of a good or service a producer is willing to produce at different prices
demand
an individual’s need or desire for a product or service at a given price
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49. demand elasticity elastic demand inelastic demand
when the demand of a product is affected by its price
elastic demand
when a change is price creates a change in demand
inelastic demand
when a change in price creates very little change in demand
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50. When Supply and Demand Meet
equilibrium price and quantity
the price at which supply equals demand
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52. What effect do supply and demand have on the price of a good or service?
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53. Costs of Doing Business
fixed costs (sunk costs)
costs that must be paid regardless of how much of a good or service is produced
variable costs
costs that fluctuate depending on the quantity of the good or service produced
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54. Fixed costs will be incurred regardless of the level of sales.
Businesses with many fixed costs have a higher risk than businesses with mostly variable costs.
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55. marginal benefit marginal cost
measures the advantages of producing one additional unit of a good or service
marginal cost
measures the disadvantages of producing one additional unit of a good or service
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56. How do the costs of doing business affect prices?
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57. Market Structure and Prices
Perfect Competition
Characteristics of perfect competition include:
a very large number of businesses
nearly identical products
many well-informed buyers
difficult to raise prices
consumers have more control over the market
businesses can leave or enter the market easily
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58. Monopolistic Competition
Characteristics of monopolistic competition include:
a large number of independent businesses
goods and services that are somewhat different
each business has a small share of the market
prices are determined competitively
differentiating products is important
businesses can easily enter or leave the market
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59. Oligopoly Characteristics of an oligopoly include:
a small number of businesses that obtain the majority of total sales revenues
the goods are similar and are close substitutes
businesses can influence prices
it is hard to enter the market
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60. Monopoly Characteristics of a monopoly include:
a single provider of a product or service
complete price control
if prices get to high, consumers may elect to do without the product or service
entry barriers exist that inhibit competition
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61. How does the market structure affect the price of a good or service?
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62. PERFORMANCE INDICATORS EVALUATED
Understand how a current issue affects the economy.
Communicate an opinion based upon facts and figures.
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63. Manage time effectively to research, outline, and present a viewpoint.
Work as a team to persuade the audience to support a certain viewpoint.
Manage time effectively to research, outline, and present a viewpoint.
Demonstrate effective teamwork and align ideas into a persuasive argument.
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64. THINK CRITICALLY
What are two advantages of allowing illegal immigrants to stay in the United States?
Why are businesses concerned about the government’s actions involving illegal immigrants from Mexico?
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65. Why are politicians conflicted by the illegal immigrant issue?
How can the United States ensure that illegal immigrants take the necessary steps to obtain legal citizenship?
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