Basic Economic Concepts
Chapter 1
A Look at Wants and Needs
Chapter 1 Section 1
Scenario
 Suppose you have $10 to spend.
 You can go to the movies OR buy lunch, but not both.
 Which is a want and which is a need?
 What is the difference?
Wants
 Determine goods and services that a business
provides.
 Things that are not necessary for survival
 Example: New computer, bike, movies, etc.
 Question: What is something you brought to school
today that is a want?
Needs
 Determines goods and services a business will provide.
 Things you must have for survival
 Example: Food, water, shelter, clothing
Public vs Private
Public Wants
Private Wants
 Shared by many people
 Individual/personal
 Highways, state parks, etc.
 Furniture, computer, etc.
 Satisfied by: government
 Satisfied by: individual
people
Goods and Services
Goods
Services
 Satisfy wants and needs
 Satisfy wants and needs
 Physical products
 Tasks that businesses
 Examples: groceries,
telephones, clothing
perform for consumers.
 People or machines
 Examples: insurance,
tourism, banking, education
Resources
 Items that people can use to obtain what they want or
need.
 Examples: Money, fuel, labor
How can resources limit your ability to
satisfy wants and needs?
Decision-Making Process
 Used to make the most of your resources
 Make good choices
 Identify and consider your various alternatives
Decision-Making Process
 Step 1: Identify the situation
 Step 2: Identify possible courses of action
 Step 3: Determine the pros and cons
 Step 4: Make a decision
 Step 5: Evaluate your decision
Decision-Making Process
Example
 Step 1:
 I only have $10 to spend. I am hungry but I really want to
go to the movies. Each will cost $10.
 Step 2:
 Go to the movies, eat lunch, go home and eat, rent a
movie
 Step 3:
 I will see the movie, I won’t be hungry, I can eat at home
and still see a movie – but I won’t be able to spend time
with my friends.
Decision-Making Process
Example
 Step 4:
 I am going to rent a movie and go home for lunch.
 Step 5:
 Always evaluate!
Business Activities
Chapter 1 Section 2
How to Define Business
 Business is any commercial activity that seeks profit by
providing goods and services to others in exchange for
money.
 Profit is the money left over after a business has paid
the cost of providing its goods and services.
The Motive of Business:
To Make a Profit
 Businesses supply with the motivation to make a profit
 Need profit to survive
 Profit is the reward for satisfying the needs and wants
of consumers and businesses.
 Wealth provided by businesses benefits the entire
community – pay taxes and provide jobs.
The Significance of Competition
 Companies thrive on competition
 Competition is the contest between businesses to win
customers
 Competition exists because companies have the
freedom to produce the products they think will be the
most profitable.
 Quality products, outstanding services, competitive
prices
Business Activities
 During product or service development:
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Identify opportunities
Evaluate the demand
Obtain start up capital (money)
Manage the production of goods/services
Market the goods and/or services
Keep records
Market Research
 The act of gathering and analyzing information about
the wants, needs, and preferences of consumers in a
certain market.
 Provides information to meet the demands of business
activity.
Business and You
 You are considered a consumer
 The person who uses goods or services.
 Businesses affect consumers when they modify or
discontinue products.
 Consumers affect business because they decide what
kinds of goods and services they want to buy.
 To avoid failure, a business must modify products,
services, and business practices to satisfy the
consumer.