Essential Standard 1.00

Understand the role of business in the global economy.

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Warm up

• Login to computers and return to table seats

• What is capitalism?

• What type of economic system does the United States have?

2

Objective 1.01

Understand economic systems.

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Agenda

• Warm up

• PPT Review on 1.01 Understanding economic systems

• Practice Exam handouts (wiki) and

• Quia practice quizzes score 80 or above

• 3rd week Stock entries (final entries)

• Everfi

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Practice Quiz Unit 1

• Objective 1.01   http://www.quia.com/quiz/3229793.html

• Objective 1.02    http://www.quia.com/quiz/3229794.html

• Objective 1.03    http://www.quia.com/quiz/3229795.html

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Practice Quiz Unit 2

• Objective 2.01

• http://www.quia.com/quiz/2643886.html

• Objective 2.02• http://www.quia.com/quiz/2670965.html

• Objective 2.03• http://www.quia.com/quiz/2695976.html

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• Satisfying needs and wants• Basic economic problem• Six steps of economic decision-making• Main types for economic systems• Market economy self-regulating principles

Topics

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Satisfying Needs and Wants

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Satisfying Needs and Wants

• What are needs?

• What are wants?

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Satisfying Needs and Wants continued• What are goods?

• What are services?

• The United States economy is the largest producer of goods and services in the world.

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Satisfying Needs and Wants continued• How do businesses use economic

resources to produce goods and services?

• The types of economic resources are:– Natural– Human– Capital

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Satisfying Needs and Wants continued• What are natural

resources?

Many natural resources are nonrenewable.

• What are human resources?

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Satisfying Needs and Wants continued

What are capital resources?

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Satisfying Needs and Wants continued

• What is the basic economic problem?

• What is scarcity?

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Satisfying Needs and Wants continued

• What is the purpose of economic decision-making?

• What happens to choices in a tradeoff?

• What is opportunity cost ?

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Six steps of economic decision-making

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Economic Decision-Making

• What is economic decision-making?• What are the six steps of economic

decision-making?1. Defining the problem2. Identifying choices3. Evaluating the advantages and disadvantages of

each choice4. Choosing one choice5. Acting on the choice6. Reviewing the decision

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Economic Decision-Making continued

Try to solve a problem

Problem: Adjust the foundation of a house

Choices: Ignore the problem

Contact companies located in the same city

Contact companies located in the next city

Contact companies located in other cities

What choice would you make?

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Economic Decision-Making continued

• Some advantages: location of local companies, companies that guarantee of services, and companies that provides simple explanation of necessary services

• Some disadvantages: prices for services and location of company in next city or other cities

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Economic Decision-Making continued• Choosing one choice: A local company that

guarantees services and provides simple explanation of services.

• Acting on choice: Schedule for local company to provide services of adjusting foundation of house.

• Reviewing decision: Routinely check on condition of foundation of house.

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Main types of economic systems

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Economic Systems

What are the three economic questions that all economies must answer?

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Economic Systems

• What is an economic system?

• The main types of economic systems are:– Command or Communist– Market– Traditional– Mixed

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Economic Systems

• Who owns the resources in the main types of economic systems?– Command

– Market

– Traditional

• Who answers the economic questions?

– Centered on family

– Government

– The people

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Market economy self-regulating principles

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United States Economic System

• What is capitalism?

• What type of economic system does the United States have?

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United States Economic System continuedThe four principles of U.S. economic system

are:

• Private property

• Freedom of choice

• Profit

• Competition

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Market Economy

• What is the role of consumers in a market economy?

• A consumer includes individuals, businesses, and government.

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Market Economy continued

What is the role of producers in a market economy?

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Market Economy continued

The market economy is based on the principles of supply and demand.

– What is demand?– What are some examples of consumer

demand?– What is supply?– What are some examples of how producers

establish supply?

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Supply and Demand Graphs

Intro to Business, 6e, Thomson South-Western 31

Supply and Demand Graphs

Intro to Business, 6e, Thomson South-Western32

Supply and Demand Graphs

Market (equilibrium) price is the point where supply and demand are equal.

Intro to Business, 6e, Thomson South-Western 33