Business in the Global Economic Environment

1. Business in the Global Economic Environment Chapter 1: Economic Decisions

2. Chapter 1 • 1.1 Satisfying Needs and Wants • Goals: • Explain the difference between needs and wants. • Distinguish between goods and services. • Describe the types of economic resources.

3. Wants v. Needs • Needs • Are required to live/survive. • Examples: food, clothing, and shelter. • Necessity.

4. Wants vs Needs • Wants • Add comfort and pleasure to our lives. • Not necessary for survival.

5. Wants vs Needs • Unlimited Wants & Needs • Wants & needs never end. • Are limited only by our imagination and by what businesses make available for sale. • Satisfying one want usually creates a new want.

6. Wants vs Needs • Everyone has unlimited wants but those wants will not be the same for each person. • What does the BBB have to say about wants and needs? • Satisfy most of our wants and needs with goods and services.

7. Goods • Things you can see and touch. • Satisfy our wants and needs. • Goods are also called products. • Examples: food, television, iPod, cell phone, bicycle, clothing, car.

8. Services • Activities provided for the satisfaction of our wants and needs. • They are consumed at the same time they are produced. • Examples: haircut, car wash, swimming lessons, massage.

9. Goods and Services • We need both goods and services to satisfy all of our wants and needs. • Supplying goods and services is what business is all about. • To supply goods and services, businesses need economic resources.

10. Economic Resources • Economic Resources: the things available to be used to produce goods and services. • Also called Factors of Production • Three Kinds of Economic Resources: • Natural • Human • Capital

11. Natural Resources • Raw materials supplied by nature. • All of the goods we use today begin with one or more natural resources. • Examples: iron ore, gold, oil, vegetables, fish, oxygen, trees, wildlife, etc.

12. Human Resources • People who work for a business. • People who work to produce goods and services. • Human Resources = Labor • Human Resources include people who: • Run their own business (entrepreneur), run farms and factories, manage banks, design machines, police the streets, check out groceries, or teach basic business!

13. Capital Resources • Capital: assets (things of value) owned by a business or individual • Capitol: a building of government • They toured the capitol room by room.

14. Capital Resources • Tools, supplies, equipment, buildings, and the money that is used to produce goods and services. • Examples: office buildings, factories, tractors, computers, delivery trucks, etc.

15. Capital Resources • Bicycle to deliver newspapers. • Computer used by a bank to prepare customer reports. • Grill used to cook the hamburgers you buy for lunch as well as the restaurant building.

16. Capital Resources • Capital: Includes money that is needed to run a business. • Example: A person may say she or he is trying to raise $40,000 in capital to expand a business. • Capital goods are important because they help us produce efficiently (faster or cheaper).

17. Economic Resources • All three economic resources – natural, human, and capital – are needed to produce goods and services to satisfy our wants and needs. • 1.1 Quiz

18. Chapter 1 • 1.1 Satisfying Needs and Wants • Goals: • Explain the difference between needs and wants. • Distinguish between goods and services. • Describe the types of economic resources.

19. Chapter 1: Activity • Illustrate each of the 3 economic resources. Add an explanation. • Illustrate an example of a good and an example of a service. Add an explanation.

20. Chapter 1 • 1.2 Economic Choices • Goals: • Describe the basic economic problem. • Explain the steps in the decision making process.

21. Economic Resources • All three economic resources – natural, human, and capital – are needed to produce goods and services to satisfy our wants. • Unfortunately…

22. Economic Resources • We Have Limited Resources • Basic Economic Problem: the conflict between unlimited wants and limited resources (also called scarcity). • Limited Resources + Unlimited Wants = Scarcity

23. Economic Resources • Scarcity: not having enough resources to satisfy every need. • Trade-off: when you give up something to have something else. • Opportunity cost: the value of the next-best alternative that you were not able to choose.

25. Economic Decision Making • Economic Decision Making: the process of choosing which needs and wants will be satisfied. • There is a proven way for good economic decision making. • The Decision Making Process

26. The Decision-Making Process • Process is used by many businesses and individuals to make important decisions. • Six steps in the decision making process.

27. The Decision-Making Process • D • I • E • C • A • R

28. The 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.

29. Chapter 1 • 1.2 Economic Choices • Goals: • Describe the basic economic problem. • Explain the steps in the decision making process.