powerpoint presentation section 1.1 pages 3-11

PowerPoint Presentation Section 1.1Section 1.1 Pages 3-11Pages 3-11

1.1 Entrepreneurship and the Economy

What you’ll learnWhat you’ll learn How small business and How small business and entrepreneurship contribute entrepreneurship contribute to the economyto the economy


What you’ll learnWhat you’ll learn How the laws of supply and How the laws of supply and demand in the free enterprise demand in the free enterprise system affect system affect entrepreneurshipentrepreneurship


What you’ll learnWhat you’ll learn The ways in which The ways in which entrepreneurs contribute to a entrepreneurs contribute to a free enterprise systemfree enterprise system


Why it’s importantWhy it’s important Understanding how the Understanding how the economy works is essential to economy works is essential to business survival.business survival.


Why it’s importantWhy it’s important The free market system The free market system allows entrepreneurs to allows entrepreneurs to compete and succeed.compete and succeed.


Key TermsKey Terms

entrepreneurentrepreneur

ventureventure

entrepreneurshipentrepreneurship

entrepreneurialentrepreneurial

economicseconomics

free enterprise systemfree enterprise system


Key Terms (Cont.)Key Terms (Cont.)

profitprofit

servicesservices

factors of productionfactors of production

scarcityscarcity

demanddemand

elasticelastic


Key Terms (Cont.)Key Terms (Cont.)

inelasticinelastic

diminishing marginal utilitydiminishing marginal utility

equilibriumequilibrium


Presentation OutlinePresentation Outline

I. THE ROLE OF SMALL I. THE ROLE OF SMALL BUSINESS AND BUSINESS AND ENTREPRENEURSHIP IN THE ENTREPRENEURSHIP IN THE ECONOMYECONOMY

II. ENTREPRENEURSHIP II. ENTREPRENEURSHIP TODAYTODAY


Presentation Outline (Cont.)Presentation Outline (Cont.)

III. THE FREE ENTERPRISE SYSTEMIII. THE FREE ENTERPRISE SYSTEMA.A. THE PROFIT MOTIVETHE PROFIT MOTIVEB.B. THE ROLE OF COMPETITIONTHE ROLE OF COMPETITION

IV. ECONOMICS: MAKING CHOICESIV. ECONOMICS: MAKING CHOICESA.A. GOODS AND SERVICESGOODS AND SERVICESB.B. FACTORS OF PRODUCTION FACTORS OF PRODUCTION C.C. SCARCITYSCARCITY



V. THE LAW OF SUPPLY V. THE LAW OF SUPPLY AND DEMANDAND DEMAND

VI. DEMANDVI. DEMAND

VII. SUPPLYVII. SUPPLY



VIII. SURPLUS, SHORTAGE, VIII. SURPLUS, SHORTAGE, AND EQUILIBRIUMAND EQUILIBRIUM

VIV. WHAT VIV. WHAT ENTREPRENEURS ENTREPRENEURS CONTRIBUTECONTRIBUTE



X. SMALL BUSINESSES X. SMALL BUSINESSES VERSUS VERSUS ENTREPRENEURIAL ENTREPRENEURIAL VENTURESVENTURES

A.A. SMALL BUSINESSESSMALL BUSINESSES

B.B. ENTREPRENEURIAL VENTURESENTREPRENEURIAL VENTURES


I. THE ROLE OF SMALL I. THE ROLE OF SMALL BUSINESS AND BUSINESS AND ENTREPRENEURSHIP IN ENTREPRENEURSHIP IN THE ECONOMYTHE ECONOMY

A.A. An An entrepreneurentrepreneur undertakes undertakes the creation, organization, the creation, organization, and ownership of a business.and ownership of a business.


B.B. Entrepreneurs accept many Entrepreneurs accept many risks and responsibilities for risks and responsibilities for the sake of profits and the sake of profits and personal satisfaction.personal satisfaction.


C.C. Creating and running a Creating and running a successfulsuccessful venture, venture, a business a business undertaking involving risk,undertaking involving risk, requires a variety of skills requires a variety of skills and knowledge.and knowledge.


D.D. The process of getting into The process of getting into and operating one’s own and operating one’s own business is called business is called entrepreneurshipentrepreneurship..


E.E. Entrepreneurial Entrepreneurial means of or means of or having to do with an having to do with an entrepreneur or entrepreneur or entrepreneurs.entrepreneurs.


II. ENTREPRENEURSHIP II. ENTREPRENEURSHIP TODAYTODAY

A.A. About one in three About one in three households is involved with households is involved with a new or small business.a new or small business.


B.B. More than 90 percent of all More than 90 percent of all businesses are small businesses are small businesses with fewer than businesses with fewer than 100 employees.100 employees.


C. C. The global market has The global market has resulted in new resources, resulted in new resources, markets, and ideas.markets, and ideas.


D.D. There is great pressure for There is great pressure for businesses to come up with businesses to come up with better services and make better services and make more choices available to more choices available to customers.customers.


E.E. EconomicsEconomics helps explain how helps explain how entrepreneurs and customers entrepreneurs and customers interact in the economy. interact in the economy.

EconomicsEconomics is the study of the is the study of the decisions or choices that go decisions or choices that go into making, distributing, and into making, distributing, and consuming products.consuming products.


Springboard

What goods and services do you buy and what types of jobs would you like to have?


III. THE FREE ENTERPRISE III. THE FREE ENTERPRISE SYSTEMSYSTEM

A.A. Most democratic nations Most democratic nations have a have a free enterprise free enterprise systemsystem..


B.B. In a free enterprise system, In a free enterprise system, everyone has the right to everyone has the right to make economic choices.make economic choices.

C.C. A free enterprise system is A free enterprise system is also called capitalism, or a also called capitalism, or a market economy.market economy.


A. THE PROFIT MOTIVEA. THE PROFIT MOTIVE

1.1. A primary incentive of free A primary incentive of free enterprise is to make a enterprise is to make a profit, profit, money that is left after all the money that is left after all the expenses of running a business expenses of running a business have been deducted from the have been deducted from the income. income.

2.2. There is a risk of failure involved There is a risk of failure involved in making a profit. in making a profit.


3.3. The risk of failure serves a The risk of failure serves a positive function in a free positive function in a free enterprise system.enterprise system.


B. THE ROLE OF B. THE ROLE OF COMPETITIONCOMPETITION

1.1. Competition between similar Competition between similar businesses is a key element in businesses is a key element in a market economy.a market economy.


2.2. Businesses compete on the Businesses compete on the basis of price and non-price basis of price and non-price factors.factors.

3.3. In a mature industry, the In a mature industry, the focus is on lowering prices.focus is on lowering prices.


4.4. In newer industries, price In newer industries, price factors are less important factors are less important than non-price factors.than non-price factors.


5.5. Non-price factors includes the Non-price factors includes the following.following.

a.a. Quality Quality

b.b. Service Service

c.c. Reputation Reputation


Discussion Starter

What are some products that are direct competition with each other for customers?


IV. ECONOMICS: MAKING IV. ECONOMICS: MAKING CHOICESCHOICES

A.A. Economics is the study of Economics is the study of the decisions that go into the decisions that go into making, distributing, and making, distributing, and consuming products.consuming products.


B.B. Many economic concepts are Many economic concepts are already familiar to you in already familiar to you in your everyday role as a your everyday role as a consumer.consumer.


VII. GOODS AND SERVICESVII. GOODS AND SERVICES

A.A. Goods and Goods and servicesservices are are products that our economic products that our economic system produces to satisfy system produces to satisfy our wants.our wants.


B.B. GoodsGoods are tangible (or are tangible (or physical) products.physical) products.

C.C. ServicesServices are intangible (or are intangible (or conceptual) products.conceptual) products.


Critical Thinking

Make a list of purchases in which quality or service is more important than price.


B. FACTORS OF B. FACTORS OF PRODUCTIONPRODUCTION

1.1. Factors of production Factors of production are are the resources that the resources that businesses use to produce businesses use to produce the goods and services the goods and services people want.people want.


B.B. There are four main factors There are four main factors of production. of production.

1.1. Land Land

2.2. Labor Labor

3.3. Entrepreneurship Entrepreneurship

4.4. Capital Capital


C. SCARCITYC. SCARCITY

1.1. When wants are greater than When wants are greater than resources, the condition is resources, the condition is called called scarcityscarcity..


2.2. Items that are scarce include Items that are scarce include the following.the following.

a.a. Land Land

b.b. Labor Labor

c.c. Capital Capital


Discussion Starter

Name some businesses that use each of the four factors of production. Support your answers with examples of how.


V. THE LAWS OF SUPPLY V. THE LAWS OF SUPPLY AND DEMANDAND DEMAND

A.A. In a free enterprise system, In a free enterprise system, prices are determined in the prices are determined in the marketplace.marketplace.


B.B. Consumers and producers Consumers and producers interact in response to the interact in response to the laws of supply and demand.laws of supply and demand.


VI. DEMANDVI. DEMAND

A.A. Demand Demand is the amount or is the amount or quantity of goods or services quantity of goods or services that consumers are willing that consumers are willing and able to buy.and able to buy.


B.B. According to the law of According to the law of demand, price is inversely demand, price is inversely related to demand.related to demand.


C.C. If a change in price has a If a change in price has a significant effect on the significant effect on the quantity demanded, demand quantity demanded, demand for the item is for the item is elasticelastic..


D.D. If a change in price has little If a change in price has little or no effect on the quantity or no effect on the quantity demanded, demand for the demanded, demand for the item is item is inelasticinelastic. Demand is . Demand is inelastic when:inelastic when:1. No acceptable substitutes available1. No acceptable substitutes available

2. The price change is small relative to 2. The price change is small relative to buyer income.buyer income.3. The product is a necessity.3. The product is a necessity.


E.E. The The diminishing marginal utilitydiminishing marginal utility establishes that price alone does establishes that price alone does not determine demand.not determine demand.

F.F. Other factors that play a role in Other factors that play a role in determining demand are:determining demand are:

1.1. IncomeIncome

2.2. TasteTaste

3.3. The amount of product already ownedThe amount of product already owned


Demand Curve for CDs Demand Curve for CDs Demand Curve for CDs Demand Curve for CDs

Fewer items will be purchased at higher prices than at Fewer items will be purchased at higher prices than at lower ones.lower ones.


Math Problem

If the CD sells for $15, what will the price be when the record store drops the price by 20%?


VII. SUPPLYVII. SUPPLY

A.A. The amount of a good or The amount of a good or service that producers are service that producers are willing to provide is called willing to provide is called supplysupply..


B.B. Producers supply greater Producers supply greater amounts when prices are amounts when prices are high, and less when prices are high, and less when prices are low.low.


Supply Curve for CDs Supply Curve for CDs Supply Curve for CDs Supply Curve for CDs

There is a direct relationship between price and the There is a direct relationship between price and the number of items produced.number of items produced.


VIII. SURPLUS, SHORTAGE, VIII. SURPLUS, SHORTAGE, AND EQUILIBRIUMAND EQUILIBRIUM

A.A. Supply and demand are Supply and demand are continually shifting in continually shifting in the marketplace.the marketplace.


B.B. EquilibriumEquilibrium is the point at is the point at which consumers buy all of a which consumers buy all of a product that is supplied, product that is supplied, leaving neither a surplus nor leaving neither a surplus nor a shortage.a shortage.


Demand and Supply Curve for CDs Demand and Supply Curve for CDs Demand and Supply Curve for CDs Demand and Supply Curve for CDs

Merging the supply and demand curves into a singleMerging the supply and demand curves into a singlegraph locates the equilibrium point of price.graph locates the equilibrium point of price.


VIV. WHAT VIV. WHAT ENTREPRENEURS ENTREPRENEURS CONTRIBUTECONTRIBUTE

A.A. They are the mechanism They are the mechanism by which a free market by which a free market economy turns demand economy turns demand into supply.into supply.


B.B. They are a principle source of They are a principle source of venture capital.venture capital.

C.C. They provide jobs. They provide jobs.

D.D. The most successful The most successful entrepreneurs change society.entrepreneurs change society.


X. SMALL BUSINESSES X. SMALL BUSINESSES VERSUS VERSUS ENTREPRENEURIAL ENTREPRENEURIAL VENTURESVENTURES

A.A. While most businesses While most businesses start small, not all start small, not all businesses stay small.businesses stay small.


B.B. Whether or not a business Whether or not a business stays small often depends on stays small often depends on the intentions, motives, and the intentions, motives, and goals of its founders.goals of its founders.


A. SMALL BUSINESSESA. SMALL BUSINESSES

1. 1. Small business owners start Small business owners start what are sometimes referred what are sometimes referred to as “mom and pop” to as “mom and pop” businesses.businesses.


2.2. “Mom and pop” businesses “Mom and pop” businesses are generally started for one are generally started for one of two reasons.of two reasons.

a.a. Create jobs for the owners Create jobs for the owners

b.b. Provide satisfying lifestyles Provide satisfying lifestyles


B. ENTREPRENEURIAL B. ENTREPRENEURIAL VENTUREVENTURE

1.1. Founders of entrepreneurial Founders of entrepreneurial ventures have different ventures have different motives from founders of motives from founders of small businesses.small businesses.


2.2. Entrepreneurial ventures are Entrepreneurial ventures are started with three principle started with three principle goals.goals.a.a. Innovate Innovateb.b. Grow the venture Grow the venture

c.c. Create value that can be Create value that can be harvested when the owners leave harvested when the owners leave the businessthe business


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powerpoint presentation section 1.1 pages 3-11

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