Intro to Business, 7e
CHAPTER 1
Economic Decisions
and Systems
1-1
Satisfying Needs and Wants
1-2
Economic Choices
1-3
Economic Systems
1-4
Supply and Demand
© 2009 South-Western, Cengage Learning
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Intro to Business, 7e
1-1 Satisfying Needs
and Wants
Learning Target:
Students will be able to:
 Explain the difference between needs and
wants.
 Distinguish between goods and services.
 Describe the types of economic resources.
© 2009 South-Western, Cengage Learning
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Intro to Business, 7e
Chapter 1
NEEDS AND WANTS
Needs are essential
Wants add to the quality of life
Needs and wants are unlimited
© 2009 South-Western, Cengage Learning
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Intro to Business, 7e
Chapter 1
ECONOMIC RESOURCES
Natural: water, land, trees, animals, and
minerals.
Human: labor (people who run farms and
factories, transport goods, provide services,
or manage businesses).
Capital: money, land, buildings, tools, and
equipment
© 2009 South-Western, Cengage Learning
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Intro to Business, 7e
1-2 Economic Choices
Learning Target
Students will:
 Understand the basic economic problem.
 Explain the steps in the decision-making
process.
© 2009 South-Western, Cengage Learning
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Intro to Business, 7e
Chapter 1
THE DECISION-MAKING
PROCESS
1. Define the problem.
2. Identify the choices.
3. Evaluate the advantages and disadvantages
of each choice.
4. Choose one.
5. Act on your choice.
6. Review your decision.
© 2009 South-Western, Cengage Learning
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Intro to Business, 7e
1-3 Economic Systems
Learning Target
Students will be able to:
 Identify the three economic questions.
 Differentiate among the main types of
economic systems.
 Describe the economic system of the United
States.
© 2009 South-Western, Cengage Learning
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Intro to Business, 7e
Chapter 1
THE THREE ECONOMIC
QUESTIONS
What to produce?
How to produce?
What needs and wants to satisfy?
A nation’s plan for answering these
three questions is called it’s economic
system.
© 2009 South-Western, Cengage Learning
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Intro to Business, 7e
Chapter 1
TYPES OF ECONOMIC
SYSTEMS
Command economy – resources are owned
and controlled by the government
Market economy – resources are owned and
controlled by the people
Traditional economy – good & services
produced the same; less developed countries
Mixed economies – combines elements of
command and market economy
© 2009 South-Western, Cengage Learning
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Intro to Business, 7e
Chapter 1
THE U.S. ECONOMIC
SYSTEM
Four principles of the U.S. economic
system:
Private property
Freedom of choice
Profit
Competition
© 2009 South-Western, Cengage Learning
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Intro to Business, 7e
1-4 Supply and Demand
Learning Target
Students will be able to:
 Describe supply and demand.
 Discuss how supply and demand affect prices
of products and services.
© 2009 South-Western, Cengage Learning
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Intro to Business, 7e
Chapter 1
PARTICIPATING IN A
MARKET ECONOMY
Consumers set demand
Producers establish supply
© 2009 South-Western, Cengage Learning
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Intro to Business, 7e
Chapter 1
Checkpoint >>
How does the price of a product affect demand and supply?
Answer
 As prices decrease, the number of consumers willing and able
to purchase the product will increase and demand will rise.
 As prices increase, the number of consumers willing and able
to purchase the product will decrease and demand will
decrease.
© 2009 South-Western, Cengage Learning
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