unit 1 needs and wants supply and demand effects on the economy

Unit 1 Needs and Wants• Supply and Demand

• Effects on the Economy

Vocabulary• Need

• Want

• Goods

• Service

• Resource

• Scarcity

• Factors of production

• Economics

• Equilibrium price

• Types of economies

• Inflation

• Deflation

• Recession

• Depression• GDP• Deficit• Debt• Surplus• Business cycle• Ethics• Sweatshops• OSHA• Social Responsibility• FDA• Equal Pay Act• EPA

What is a Need and a Want?

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Four Factors of Production /Resources

• Natural resources

• Human resources

• Capital resources

• Entrepreneurial resources

Scarcity -

• Do you believe that the world is likely to run out of oil?

• 2. If we're really not running out of oil, why do so many media reports encourage people to believe we are?

Quiz?

• What is the meaning of scarcity

• Name a scarce resource

• What is a natural resource

• What is a human resource

Define EconomicsDefine Economics

The study of how society chooses to use resources to produce and distribute goods and services for people’s consumption.

The basis of business is also the study of economics. Businesses look at people’s wants and needs and then decide whether to supply the demand.

Supply and Demand in a Market system

Supply is controlled by the business

Demand is generated by the consumer

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Pric

e

Quantity Purchased

Supply Curve

Demand Curve

Demand curve is based on price. The higher the price the Lower the amount demanded.

Supply curve is based on price.The higher the price the moreA business is willing the sell.

10

100 1,000

20

Equilibrium Price

Types of Economics Systems

• Command Economy– Communism

• Socialism

• Market Economy

• Mixed Economy

Economies

• Command - Government controlled• 1.Strong – communism – government

makes all economic decisions

• 2. Moderate – socialism – some private business – some government controlled

• Free Market - Capitalism, resources are privately held.

• Mixed – most countries fall under this. Partial use of both free and command.

• Will we ever go back to living like this?

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Economic Indicators

• GDP

• Unemployment

• Housing

• Rate of Inflation

• National Debt

GNP or GDP

• Both of these indicators reflect the sum of goods and services.

• GNP - includes profit by businesses operating outside the country- Nike in South America

• GDP- includes business done by foreign countries inside our borders- Nissan Titan

Five Factors that affect GDP

• Population

• Entrepreneurialism

• Trade

• War

• Natural resources

Turn to your neighbor and give them one reason why

each of the indicators would be good for the economy.

Have your neighbor tell you one reason why that indicator is bad or brings the economy

down.

Business Cycle

• Prosperity

• Recession

• Depression

• Recovery

• **Book page 40***

Business Ethics and Social Responsibility

Goal of Business is to make a

• Profits before social welfare?

profit.

• When a business is tempted to put profits before social welfare there is a conflict of interest

What is Business Ethics?

• Businesses have an ethical obligation to provide safe product, create jobs, protect the environment, and contribute to the standard of living.

Business Ethics

Human Relations•Hiring•Firing•Unions•Diversity

People Factor

Land FactorSociety Factor

Law Factor

Govern Regulations•Working within the law•Operating a business w/ others fairly

Environmental•Pollution control•Recycling

Community Involvement•Giving to the community•Sponsoring events

For any business to be successful, it must operate legally and humanely.

• Shirtwaist Factory, New York City• Sweatshops good or bad?

• Levi Strauss

List under headings companies which act responsibly and/or ethically and those who do not.

• Johnson & Johnson 1982 – Tylenol recall $100 mill

• Ford/Firestone 1999 – Jeep recall

• Post – Contributes a percentage of purchase to the Boys and Girls Club of America

• GM – 30% reduction of waste

Boycotts

• How do boycotts affect supply and demand?• Do boycotts help or hurt?

Ways to use ethics in business

• Quality product at a fair price– Repeat customers – good reputation

• Follow government regulations– If not – Jail or fines

• Employee relations– Less dissatisfaction - less turn-over of skilled

labor

Government aids for social responsibility• FDA – protects consumers from dangerous

or falsely advertised products.

• Equal Pay Act – men and women should be paid the same for doing equal work.

• EPA – protects environment and controls pollution

• OSHA –protects employees from unsafe work environments.