UNIT 1: BUSINESS FUNDAMENTALSEconomic Basics

Profile: Pita Pit Page 5 in the World of Business textbook

Profile: Pita Pit1. How has Pita Pit been successful in

matching its understanding of customers with the needs and wants of its customers?

2. Businesses always try and gain a competitive edge on their competition. Explain how Pita Pit has been successful in this regard?

What is a Business? Businesses come in many shapes and

sizes, such as local, regional, national, and/or global. They are classified by their size, structure, and the role they play in the community.

There are many different ways to describe or classify a business, depending on characteristics such as the purpose of the business, its size, its structure, and the role it plays in the community.

Good vs. Service Record these terms & definitions if they

are new to you Good:

An item that can be seen and touched (tangible)

Service: Providing assistance to others that does not

result in a tangible product (intangible)

Q. What are some examples of goods & services?

Profit or Non-Profit?1. For-Profit Business

A for-profit business produces or sell goods and services to satisfy the needs, wants, and demands of consumers for the purpose of a making profit.

Profit is the income left after all costs and expenses are paid. Expenses are the payments involved in running a business and the assets that

get “used up” operating it. Cost is the money required to produce or provide the goods and services.Revenue – Expenses = Profit (or Loss)

  When a business makes a profit, it can

1. reinvest money for expansion2. provide improved goods and services3. give the owner(s) funds to spend on personal needs or wants

The business is considered solvent when debts are paid and financial obligations are met.

2. Non-profit and Not-for-profit OrganizationsA non-profit and/or not-for-profit organization operates strictly to help people in a community.

Non-profit Organizations 

The primary motive of a non-profit organization is to raise funds for a specific goal. Only charities and charitable organizations are called non-profit and are allowed to raise such funds. These organizations operate to serve people and their communities.

Not-for-profit OrganizationsA not-for-profit organization uses any surplus funds to improve the services offered to its members. However, they do not distribute profits to members. A co-operative, unlike a not-for-profit organization, consists of an independent association of persons who join together to meet economic, social, and cultural needs and goals.

 Q. What are some examples of NFPs?

Task: Complete your ‘Profit or Non-Profit’ worksheet

One way to classify a business is by its motive for existence. For each business and organization listed, decide whether

it is a for-profit or non-profit business/organization by placing an X in the appropriate column. Then describe

its primary goal.

Video: High-priced Fashion (7 min) http://www.youtube.com/watch?v=PWOE

nMsgFGY

End of lesson 1

Large or Small Business A small or medium-sized business

(SMB) can be classified by the following characteristics: employs fewer than 500 people estimated to be over one million in

Canada provides jobs for more than 60 percent

of the Canadian workforce

Forms of Business OwnershipInformal descriptions of business ownership include:

1. sole proprietorship

2. partnership 3. corporation 4. co-operative 5. franchise

The Role of the ConsumerMost businesses provide goods or services to satisfy

consumer needs and wants.

Producers are the businesses that make goods or provide services that consumers need or want.

Consumers

are the people who purchase goods and services from producers.

 A marketplace  

or location is where producers and consumers come together to buy and sell their goods and services.

Businesses use consumer habits plus their own research to decide what quantities of goods and services they will provide to consumers. Some key questions that businesses might ask about themselves are

When do they want these goods and services?

Where do they want them?

How much goods or services do they want?

What price will they pay for these goods and services?

  Consumers greatly influence businesses in regards to what they

produce and how they deliver it.

Consumer Influence Consumer influence on price

Businesses are in control when they have pricing power. They can increase prices in response to increased costs or to increase their profits.

Consumers have control when they have power. They demonstrate this by “voting with their feet” to look elsewhere for products and services.

Consumer influence on service Consumer purchasing power gives individuals the

control to buy goods and services at the price they want and the location they like. This power influences the products, prices, and service levels that businesses offer consumers.

Task: Consumer Influence Worksheet Video: Consumer Influence Video (5

mins)Over time, a shift has occurred from businesses controlling the marketplace to consumers having more influence on decisions that are made in the marketplace. For each item below, provide an example of how consumers have influenced the product, price, or service. The first example has been completed for you.

End of lesson 2

Starting a Business Characteristics of Entrepreneurs

Entrepreneurs are individuals who are risk-takers and problem-solvers. They are acutely aware of opportunities in the marketplace and take advantage of these in their businesses.

What do you think are some important entrepreneurial characteristics?

Consumer Needs and Wants

Entrepreneurs often start businesses to satisfy consumer needs. Basic survival needs for individuals are food, clothing, and shelter. However, entrepreneurs can also provide consumers with new products or services that are not considered a need but a want—something that adds comfort or pleasure to their lives.

Task: Using your textbook, read pages 15-22 and answer the following

questions:  List four characteristics required of an entrepreneur?   When planning a new business, what factors need to be

considered with respect to potential consumers?

There are 3 ways a business can respond to customer feedback. What are they?

Explain how too much inventory can hinder a business.

List the 5 steps in the decision making model.

1 Red Paperclip (9 minutes)

As you watch the ABC 20/20 segment, fill in your worksheet

End of lesson 3

Economic Systemsare a way of dealing with the selection, production, distribution, and consumption of goods and services. Government and business work together to foster activity and growth in the marketplace.

Economic systems have to answer three key questions:

What goods and services should be produced within the system?

For whom should these goods and services be produced?

How should these goods and services be produced?

Law of DemandLaw of Demand

Demand is the quantity of a good or service that consumers are willing and able to buy at a particular price.

Law of demand and its relationship to prices and consumers is defined as the following: When prices decrease consumers buy more and demand goes up . When prices increase consumers buy less; demand goes down .

Several conditions that create demand are: consumer awareness Price Supply accessibility

Law of Supply

Supply is the quantity of a good or service that businesses are willing and able to provide within a range of prices that people would be willing to pay. Increasing the quantity supplied as prices increase is called the law of supply. 

Several conditions that affect supply are the cost of producing or providing a good or service the price consumers are willing to pay for it

Relating Price to Supply and Demand Price is determined by supply and demand as well as the cost

of producing or providing the good or service

Task: Using your textbook (pages 28-32) answer the following questions: What conditions create demand? List the four factors that increase or

decrease demand. What conditions affect supply?   List the five factors that can increase or

decrease supply.  End of lesson 4

Supply & Demand for Video games Video (8 mins)

Chart - The relationship between supply and demand is a fundamental concept of economics and forms the basis of our economy. Product prices are a reflection of supply and demand. Keep this in mind as you read each statement below. Indicate whether the statement is true or false by placing an X in the appropriate column.