PowerPoint Presentation

Section 1.1
 Pages 3-11
1.1 Entrepreneurship and the Economy
What you’ll learn
 How
small business and
entrepreneurship contribute
to the economy
1.1 Entrepreneurship and the Economy
What you’ll learn
 How
the laws of supply and
demand in the free enterprise
system affect
entrepreneurship
1.1 Entrepreneurship and the Economy
What you’ll learn
 The
ways in which
entrepreneurs contribute to a
free enterprise system
1.1 Entrepreneurship and the Economy
Why it’s important
 Understanding
how the
economy works is essential to
business survival.
1.1 Entrepreneurship and the Economy
Why it’s important
 The
free market system
allows entrepreneurs to
compete and succeed.
1.1 Entrepreneurship and the Economy
Key Terms
entrepreneur
venture
entrepreneurship
entrepreneurial
economics
free enterprise system
1.1 Entrepreneurship and the Economy
Key Terms (Cont.)
profit
services
factors of production
scarcity
demand
elastic
1.1 Entrepreneurship and the Economy
Key Terms (Cont.)
inelastic
diminishing marginal utility
equilibrium
1.1 Entrepreneurship and the Economy
Presentation Outline
I. THE ROLE OF SMALL BUSINESS
AND ENTREPRENEURSHIP IN
THE ECONOMY
II. ENTREPRENEURSHIP TODAY
1.1 Entrepreneurship and the Economy
Presentation Outline (Cont.)
III. THE FREE ENTERPRISE SYSTEM
A.
B.
THE PROFIT MOTIVE
THE ROLE OF COMPETITION
IV. ECONOMICS: MAKING CHOICES
A.
B.
C.
GOODS AND SERVICES
FACTORS OF PRODUCTION
SCARCITY
1.1 Entrepreneurship and the Economy
Presentation Outline (Cont.)
V. THE LAW OF SUPPLY AND
DEMAND
VI. DEMAND
VII. SUPPLY
1.1 Entrepreneurship and the Economy
Presentation Outline (Cont.)
VIII. SURPLUS, SHORTAGE, AND
EQUILIBRIUM
VIV. WHAT ENTREPRENEURS
CONTRIBUTE
1.1 Entrepreneurship and the Economy
Presentation Outline (Cont.)
X. SMALL BUSINESSES VERSUS
ENTREPRENEURIAL
VENTURES
A.
SMALL BUSINESSES
B.
ENTREPRENEURIAL VENTURES
1.1 Entrepreneurship and the Economy
I. THE ROLE OF SMALL
BUSINESS AND
ENTREPRENEURSHIP IN
THE ECONOMY
A. An entrepreneur undertakes
the creation, organization,
and ownership of a business.
1.1 Entrepreneurship and the Economy
B. Entrepreneurs accept many
risks and responsibilities for
the sake of profits and
personal satisfaction.
1.1 Entrepreneurship and the Economy
C. Creating and running a
successful venture, a business
undertaking involving risk,
requires a variety of skills
and knowledge.
1.1 Entrepreneurship and the Economy
D. The process of getting into
and operating one’s own
business is called
entrepreneurship.
1.1 Entrepreneurship and the Economy
E. Entrepreneurial means of or
having to do with an
entrepreneur or
entrepreneurs.
1.1 Entrepreneurship and the Economy
II. ENTREPRENEURSHIP
TODAY
A. About one in three
households is involved with
a new or small business.
1.1 Entrepreneurship and the Economy
B. More than 90 percent of all
businesses are small
businesses with fewer than
100 employees.
1.1 Entrepreneurship and the Economy
C. The global market has
resulted in new resources,
markets, and ideas.
1.1 Entrepreneurship and the Economy
D. There is great pressure for
businesses to come up with
better services and make
more choices available to
customers.
1.1 Entrepreneurship and the Economy
E. Economics helps explain how
entrepreneurs and customers
interact in the economy.
Economics is the study of the
decisions or choices that go
into making, distributing, and
consuming products.
1.1 Entrepreneurship and the Economy
Springboard
What goods and services
do you buy and what
types of jobs would you
like to have?
1.1 Entrepreneurship and the Economy
III. THE FREE ENTERPRISE
SYSTEM
A. Most democratic nations
have a free enterprise
system.
1.1 Entrepreneurship and the Economy
B. In a free enterprise system,
everyone has the right to
make economic choices.
C. A free enterprise system is
also called capitalism, or a
market economy.
1.1 Entrepreneurship and the Economy
A. THE PROFIT MOTIVE
1. A primary incentive of free
enterprise is to make a profit,
money that is left after all the
expenses of running a business
have been deducted from the
income.
2. There is a risk of failure involved
in making a profit.
1.1 Entrepreneurship and the Economy
3. The risk of failure serves a
positive function in a free
enterprise system.
1.1 Entrepreneurship and the Economy
B. THE ROLE OF
COMPETITION
1. Competition between similar
businesses is a key element in
a market economy.
1.1 Entrepreneurship and the Economy
2. Businesses compete on the
basis of price and non-price
factors.
3. In a mature industry, the
focus is on lowering prices.
1.1 Entrepreneurship and the Economy
4. In newer industries, price
factors are less important
than non-price factors.
1.1 Entrepreneurship and the Economy
5. Non-price factors includes the
following.
a. Quality
b. Service
c. Reputation
1.1 Entrepreneurship and the Economy
Discussion Starter
What are some products
that are direct
competition with each
other for customers?
1.1 Entrepreneurship and the Economy
IV. ECONOMICS: MAKING
CHOICES
A. Economics is the study of
the decisions that go into
making, distributing, and
consuming products.
1.1 Entrepreneurship and the Economy
B. Many economic concepts are
already familiar to you in
your everyday role as a
consumer.
1.1 Entrepreneurship and the Economy
VII. GOODS AND SERVICES
A. Goods and services are
products that our economic
system produces to satisfy
our wants.
1.1 Entrepreneurship and the Economy
B. Goods are tangible (or
physical) products.
C. Services are intangible (or
conceptual) products.
1.1 Entrepreneurship and the Economy
Critical Thinking
Make a list of purchases
in which quality or
service is more important
than price.
1.1 Entrepreneurship and the Economy
B. FACTORS OF
PRODUCTION
1. Factors of production are
the resources that
businesses use to produce
the goods and services
people want.
1.1 Entrepreneurship and the Economy
B. There are four main factors
of production.
1. Land
2. Labor
3. Entrepreneurship
4. Capital
1.1 Entrepreneurship and the Economy
C. SCARCITY
1. When wants are greater than
resources, the condition is
called scarcity.
1.1 Entrepreneurship and the Economy
2. Items that are scarce include
the following.
a. Land
b. Labor
c. Capital
1.1 Entrepreneurship and the Economy
Discussion Starter
Name some businesses that
use each of the four factors
of production. Support
your answers with
examples of how.
1.1 Entrepreneurship and the Economy
V. THE LAWS OF SUPPLY
AND DEMAND
A. In a free enterprise system,
prices are determined in the
marketplace.
1.1 Entrepreneurship and the Economy
B. Consumers and producers
interact in response to the
laws of supply and demand.
1.1 Entrepreneurship and the Economy
VI. DEMAND
A. Demand is the amount or
quantity of goods or services
that consumers are willing
and able to buy.
1.1 Entrepreneurship and the Economy
B. According to the law of
demand, price is inversely
related to demand.
1.1 Entrepreneurship and the Economy
C. If a change in price has a
significant effect on the
quantity demanded, demand
for the item is elastic.
1.1 Entrepreneurship and the Economy
D. If a change in price has little
or no effect on the quantity
demanded, demand for the
item is inelastic. Demand is
inelastic when:
1. No acceptable substitutes available
2. The price change is small relative to
buyer income.
3. The product is a necessity.
1.1 Entrepreneurship and the Economy
E. The diminishing marginal utility
establishes that price alone does
not determine demand.
F. Other factors that play a role in
determining demand are:
1.
2.
3.
Income
Taste
The amount of product already owned
1.1 Entrepreneurship and the Economy
Demand Curve for CDs
Fewer items will be purchased at higher prices than at
lower ones.
1.1 Entrepreneurship and the Economy
Math Problem
If the CD sells for $15,
what will the price be
when the record store
drops the price by 20%?
1.1 Entrepreneurship and the Economy
VII. SUPPLY
A. The amount of a good or
service that producers are
willing to provide is called
supply.
1.1 Entrepreneurship and the Economy
B. Producers supply greater
amounts when prices are
high, and less when prices are
low.
1.1 Entrepreneurship and the Economy
Supply Curve for CDs
There is a direct relationship between price and the
number of items produced.
1.1 Entrepreneurship and the Economy
VIII. SURPLUS, SHORTAGE,
AND EQUILIBRIUM
A. Supply and demand are
continually shifting in
the marketplace.
1.1 Entrepreneurship and the Economy
B. Equilibrium is the point at
which consumers buy all of a
product that is supplied,
leaving neither a surplus nor
a shortage.
1.1 Entrepreneurship and the Economy
Demand and Supply Curve for CDs
Merging the supply and demand curves into a single
graph locates the equilibrium point of price.
1.1 Entrepreneurship and the Economy
VIV. WHAT
ENTREPRENEURS
CONTRIBUTE
A. They are the mechanism
by which a free market
economy turns demand
into supply.
1.1 Entrepreneurship and the Economy
B. They are a principle source of
venture capital.
C. They provide jobs.
D. The most successful
entrepreneurs change society.
1.1 Entrepreneurship and the Economy
X. SMALL BUSINESSES
VERSUS
ENTREPRENEURIAL
VENTURES
A. While most businesses
start small, not all
businesses stay small.
1.1 Entrepreneurship and the Economy
B. Whether or not a business
stays small often depends on
the intentions, motives, and
goals of its founders.
1.1 Entrepreneurship and the Economy
A. SMALL BUSINESSES
1. Small business owners start
what are sometimes referred
to as “mom and pop”
businesses.
1.1 Entrepreneurship and the Economy
2. “Mom and pop” businesses
are generally started for one
of two reasons.
a. Create jobs for the owners
b. Provide satisfying lifestyles
1.1 Entrepreneurship and the Economy
B. ENTREPRENEURIAL
VENTURE
1. Founders of entrepreneurial
ventures have different
motives from founders of
small businesses.
1.1 Entrepreneurship and the Economy
2. Entrepreneurial ventures are
started with three principle
goals.
a. Innovate
b. Grow the venture
c. Create value that can be
harvested when the owners leave
the business
1.1 Entrepreneurship and the Economy
PowerPoint Presentation
End of Section 1.1