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Chapter 1
Basic Economic
Concepts
Section 1.1
A Look at Wants
and Needs
The Main Idea
Businesses make money by offering goods and
services to satisfy the wants and needs of
consumers and other businesses. In this way, wants
and needs drive the U.S. economy.
Graphic Organizer
Suppose you had $10. You could buy lunch
or go to a movie.
Need
Lunch
Movie
Which of these things do you want?
Which do you need?
Want
Wants and Needs Drive the Economy
Businesses make money by satisfying the
wants and needs of consumers and other
businesses.
In this way, wants and needs drive the
economy.
An Abundance of Wants and Needs
Wants and needs
determine what
products and services
businesses provide.
wants
things that you do not
have to have to survive
needs
things that you must have
to survive
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Basic
Needs
Food
Water
Shelter
Private
Wants
A family may
want a new
kitchen table
A business
may want a
new computer
system
Public
Needs
Highways
Hospitals
Satisfying Wants and Needs
Businesses provide
goods and services
to satisfy the wants
and needs of
businesses and
consumers.
goods
physical products
services
tasks that businesses
perform for consumers
How Resources Limit the Ability to Satisfy
Wants and Needs
No one has enough
resources to satisfy
all of their wants.
resources
items that people can use
to make or obtain what
they need or want
Making the Most of Your Resources
You can make the most of your resources by
making careful decisions about what to buy.
Figure 1.1
The 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 the decision.
Step 5
Evaluate the decision.
You work as an event planner for a local company.
You are in charge of hiring a caterer for the
company’s 10th anniversary celebration. You have
bids from four caterers in town. One of the bids is
from a caterer who is an old friend. His bid is higher
than the three others.
Decision Making Would your relationship with the
caterer affect which company you would hire?
Explain your answer.
Answer
The event planner should recuse himself or herself
from the decision-making process due to the
conflict of interest. The employee has an ethical
obligation to act in the best interests of the
company.
1. Describe the differences between public
wants and private wants.
Public wants are shared by many people;
individuals or small groups of people have
private wants.
2. Define resources.
Resources are items people use to make or
obtain what they need or want. Examples of
resources include money, fuel, and labor.
3. List the steps in the decision-making
process.
identify the situation, list possible courses of
action, determine pros and cons, make the
decision, evaluate the decision
End of
Chapter 1
Basic Economic
Concepts
Section 1.1
A Look at Wants
and Needs
Click here to advance to the next slide.
Chapter 1
Basic Economic
Concepts
Section 1.1
A Look at Wants
and Needs
The Main Idea
Businesses seek profit by providing goods and
services in exchange for money. Companies thrive
on competition, the contest between businesses to
win customers. Competition and profit motivate
businesses to continually strive to find new ways to
satisfy customers.
How to Define Business
Your wants and
needs are usually
satisfied by a
business.
business
any commercial activity
that seeks profit by
providing goods and
services to others in
exchange for money
How to Define Business
Businesses seek to
make a profit.
profit
the money left over after a
business has paid the cost
of providing its goods and
services
How to Define Business
Businesses provide consumers with
necessities, such as food, clothing, housing,
medical care, and transportation.
Businesses also provide goods and services
that make life easier and better.
The Motive of Business: To Make a Profit
Without a profit, a company cannot survive.
The wealth created by businesses benefits
the entire community because businesses
pay taxes and provide jobs.
The Significance of Competition
Competition happens
when businesses
continually try to
improve their products
and services and
do better than one
another.
competition
the contest between
businesses to win
customers
The Significance of Competition
Offer
quality
products
Offer
outstanding
service
Offer
competitive
prices
Graphic Organizer
The success of a
business depends
on how well key
activities are
coordinated,
managed, and
performed.
Identifying opportunities for products
and/or services
Evaluating the demand for products and/or
services
Managing the production of goods and/or
services
Marketing the goods and/or services
Keeping records to satisfy government
requirements and improve processes
Business Activities
Some business
activities should be
supported by market
research.
market research
the act of gathering and
analyzing information
about the wants, needs,
and preferences of
consumers in a certain
market
Target Market
A target market is a group of people identified
as those most likely to become customers.
Develop a list of shoe stores in your area and
the likely target market for each.
Business and You
Businesses make
many decisions that
impact you, the
consumer.
consumer
a person who uses goods
and services
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Businesses Affect Consumers
Businesses decide what goods and services
to produce.
Businesses affect the consumer when a product
is discontinued.
Business affects you as a wage earner because
they provide jobs.
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Consumers Also Affect Businesses
Consumers decide what kind of goods and
services they want.
Consumers decide where they will buy the
goods and services they want.
The decisions of consumers can determine the
success or failure of a business.
1. Define business
Business is any activity involving the exchange
of money for goods and services.
2. List the activities that every business
undertakes when developing new products
and services.
identify opportunities, evaluate demand, obtain
money, manage production, market products,
keep records
3. Describe why it is important to understand
how business impacts you and how you
impact business.
Answer pending.
End of
Chapter 1
Basic Economic
Concepts
Section 1.1
A Look at Wants
and Needs