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

Principles of Business, Marketing, and FinancePrinciples of Business, Marketing, and FinanceLesson NineLesson NinePrinciples of Business, Marketing, and FinancePrinciples of Business, Marketing, and FinanceLesson NineLesson Nine

Producers in a Private Enterprise SystemProducers in a Private Enterprise System

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Basic Economic ProblemBasic Economic Problem

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Questions Economies Must Questions Economies Must AnswerAnswer

Questions Economies Must Questions Economies Must AnswerAnswer

What goods and services will be produced?

How will they be produced?

For whom will they be produced?


Economic SystemsEconomic Systems


America’s Private Enterprise America’s Private Enterprise SystemSystem


Based on independent decisions by businesses and consumers with only a limited government role regulating those relationships




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


ConsumersConsumersConsumersConsumers

Individuals who purchase products and services to satisfy needs


DemandDemandDemandDemand

a relationship between the quantity of a product consumers are willing and able to

purchase and the price


ProducersProducersProducersProducers

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


GovernmentGovernmentGovernmentGovernment

least amount of involvement in free enterprise systemleast amount of involvement in free enterprise system

some regulationssome regulations

use taxes for servicesuse taxes for services


Business Customer Business Customer ClassificationsClassifications


Extractors-1.2 million businessesExtractors-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




Forms of ProductionForms of ProductionForms of ProductionForms 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


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