Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
Chapter 3 –Market Economy Business Ownership Spring 2007 Williams C. Greene, (2000). Entrepreneurship Ideas in Action. Cin...
Lesson 3.1 What is an Economy? <ul><li>Different countries have different economic systems; different systems affect how a...
Scarcity <ul><li>Scarcity  occurs when people’s needs and wants are unlimited and the resources to produce the goods and s...
Command Economy <ul><li>In a  command economy , the government determines what, how, and for whom products and services ar...
Market Economy <ul><li>In a  market economy,  individuals decide what, how, and for whom to produce goods and services. </...
Which one is the U.S. <ul><li>So, what kind of an economy are we in living in the United States? </li></ul><ul><li>Command...
Supply and Demand <ul><li>If a market economy is based on personal choice, why does there always seem to be just enough of...
Supply <ul><li>Supply is how much of a good or service a producer is willing to produce at different prices. </li></ul><ul...
Demand <ul><li>Demand is an individual’s need or desire for a product or service at a given price. </li></ul><ul><li>Indiv...
Equilibrium Price and Quantity  <ul><li>The point at which the supply and demand curves meet is what is known as the  equi...
Monopoly <ul><li>When a company controls all of a market, it has a  monopoly . </li></ul>
Lesson 3.2 The Concept of Cost <ul><li>Entrepreneurs need to know how much it costs to produce their goods or services to ...
Fixed Costs vs. Variable Costs <ul><li>Fixed Costs  are costs that must be paid regardless of how much of a good or servic...
Marginal Benefits vs.  Marginal Costs <ul><li>Marginal benefit  measures the advantages of producing one additional unit o...
Opportunity Cost <ul><li>Opportunity cost  is the cost of choosing one opportunity or investment over another. </li></ul><...
Upcoming SlideShare
Loading in …5
×

Ch. 3 Market Economy

5,697 views

Published on

Published in: Business
  • Be the first to comment

Ch. 3 Market Economy

  1. 1. Chapter 3 –Market Economy Business Ownership Spring 2007 Williams C. Greene, (2000). Entrepreneurship Ideas in Action. Cincinnati, OH: South-Western.
  2. 2. Lesson 3.1 What is an Economy? <ul><li>Different countries have different economic systems; different systems affect how an item is produced, how it is distributed, and the demand for the item. </li></ul><ul><li>(pg. 50) </li></ul>
  3. 3. Scarcity <ul><li>Scarcity occurs when people’s needs and wants are unlimited and the resources to produce the goods and services to meet those needs and wants are limited. </li></ul><ul><li>(pg. 50) </li></ul>
  4. 4. Command Economy <ul><li>In a command economy , the government determines what, how, and for whom products and services are produced. </li></ul><ul><li>Because the government makes these decisions there is little choice for consumers. (pg. 50) </li></ul>
  5. 5. Market Economy <ul><li>In a market economy, individuals decide what, how, and for whom to produce goods and services. </li></ul><ul><li>Individual choice creates the market, so there are many items available that are very similar. (pg. 51) </li></ul>
  6. 6. Which one is the U.S. <ul><li>So, what kind of an economy are we in living in the United States? </li></ul><ul><li>Command Economy or </li></ul><ul><li>Market Economy </li></ul>
  7. 7. Supply and Demand <ul><li>If a market economy is based on personal choice, why does there always seem to be just enough of everything? </li></ul><ul><li>This is due to Supply and Demand </li></ul><ul><li>(pg. 52) </li></ul>
  8. 8. Supply <ul><li>Supply is how much of a good or service a producer is willing to produce at different prices. </li></ul><ul><li>Suppliers are willing to supply more of a product or service at a higher price </li></ul><ul><li>(pg. 52) </li></ul>
  9. 9. Demand <ul><li>Demand is an individual’s need or desire for a product or service at a given price. </li></ul><ul><li>Individuals are willing to consume more of a product or service at a lower price </li></ul><ul><li>(pg. 52) </li></ul>
  10. 10. Equilibrium Price and Quantity <ul><li>The point at which the supply and demand curves meet is what is known as the equilibrium price and quantity . </li></ul><ul><li>(pg. 53) </li></ul>Equilibrium Price
  11. 11. Monopoly <ul><li>When a company controls all of a market, it has a monopoly . </li></ul>
  12. 12. Lesson 3.2 The Concept of Cost <ul><li>Entrepreneurs need to know how much it costs to produce their goods or services to determine their profits. </li></ul><ul><li>To do that they must consider all the resources that go into producing the good or service to determine the selling price. </li></ul>
  13. 13. Fixed Costs vs. Variable Costs <ul><li>Fixed Costs are costs that must be paid regardless of how much of a good or service is produced. Fixed costs are also called (Sunk Costs) Example: Rent </li></ul><ul><li>Variable Costs are costs that go up and down depending on the quantity of the good or service produced. </li></ul><ul><li>Example: Buying more apple pies at Mc D’s as more customers demand them </li></ul><ul><li>(pg. 55) </li></ul>
  14. 14. Marginal Benefits vs. Marginal Costs <ul><li>Marginal benefit measures the advantages of producing one additional unit of a good or service. </li></ul><ul><li>Marginal Cost measures the disadvantages of producing one additional unit of a good or service. </li></ul><ul><li>(pg. 56) </li></ul>
  15. 15. Opportunity Cost <ul><li>Opportunity cost is the cost of choosing one opportunity or investment over another. </li></ul><ul><li>Example: You want to start your own business but you have been offered a job that pays $60,000 with extra benefits. </li></ul><ul><li>(pg. 57) </li></ul>

×