1. Principles of Business, Marketing, and Finance Lesson Nine Producers in a Private Enterprise System UNT in partnership with TEA, Copyright ©. All rights reserved

2. Scarcity Unlimited wants and needs Limited resources Choices must be made Basic Economic Problem UNT in partnership with TEA, Copyright ©. All rights reserved 2

3. Questions Economies Must Answer  What goods and services will be produced?  How will they be produced?  For whom will they be produced? UNT in partnership with TEA, Copyright ©. All rights reserved 3

4. Economic Systems Controlled Economy Mixed Economy Market Economy UNT in partnership with TEA, Copyright ©. All rights reserved 4

5. America’s Private Enterprise System  Based on independent decisions by businesses and consumers with only a limited government role regulating those relationships UNT in partnership with TEA, Copyright ©. All rights reserved 5

6. America’s Private Enterprise System  Characteristics of Private Enterprise –resources of production are owned and controlled by individual producers –Producers use the profit motive to decide what to produce-use of resources to obtain the greatest profit –Individual consumers make decisions about what will be purchased to satisfy needs –Consumers use value in deciding what to consume –Government stays out of exchange activities between producers and consumers unless it is clear that individuals or society are harmed by the decision UNT in partnership with TEA, Copyright ©. All rights reserved 6

7. Consumers  Individuals who purchase products and services to satisfy needs UNT in partnership with TEA, Copyright ©. All rights reserved 7

8. Demand  a relationship between the quantity of a product consumers are willing and able to purchase and the price UNT in partnership with TEA, Copyright ©. All rights reserved 8

9. Producers  businesses that use their resources to develop products and services to consumers for profit –Supply-relationship between the quantity of a product that producers are willing and able to provide and the price –Determine the needs and demands of consumers UNT in partnership with TEA, Copyright ©. All rights reserved 9

10. Government  least amount of involvement in free enterprise system  some regulations  use taxes for services UNT in partnership with TEA, Copyright ©. All rights reserved 10

11. Business Customer Classifications  Extractors-1.2 million businesses –farms and ranches –mining companies –oil refineries –manufacturers of business and consumer products –construction-largest production category-over 700,000 companies –small-less than $10,000 a year on purchases –large-employ several hundred thousand people worldwide and may easily spend $10 million in one day on purchases UNT in partnership with TEA, Copyright ©. All rights reserved 11

12. Business Customer Classifications Retailers Service Businesses Government Non-Profit Organizations UNT in partnership with TEA, Copyright ©. All rights reserved 12

13. Forms of Production  Extraction and cultivation - products are obtained from nature or grown using natural resources  Processing -changing and improving the form of another product  Manufacturing -combines raw materials and processed goods into finished product UNT in partnership with TEA, Copyright ©. All rights reserved 13