Chapter 3A Business and Economics

INTRODUCTI
AgEntrep 313 – INTRO TO AGRI COMMODITY & ENTREPRENEURIAL DEVELOPMENT

CHAPTER 03_INTRODUCTION TO BUSINESS AND ECONOMICS
ON TO
BUSINESS
AND PREPARED BY:
ECONOMICS
MR. ROSEWIN L. SEVANDAL
MR. JUN OLIVER L. ABO-ABO
MS. LEONIE LOVE ABREGANA
Subject Instructors
UNIVERSITY OF SCIENCE AND TECHNOLOGY OF SOUTHERN PHILIPPINES - CLAVERIA

INTRODUCTION TO
BUSINESS AND
ECONOMICS
•Summarize the foundational economic principles of supply
and demand.
• Distinguish between an economic good and an economic
service, and draw conclusions about how the law of supply and
demand influences what goods and services businesses will
produce using limited resources.
• Using a range of goods and services as evidence, write a brief
informative text illustrating this relationship and the
implications for consumers and the economy at large.
YOU
DO!
What does it
mean
to be in
I CAN . . .
• Define business and its benefits
• Describe the four functions of
business
Impact of Business
• A business is a specific organization.
• However, business is the term for all the activities
involved in developing and exchanging products.
• Must be organized and focused on the customer
• Consumer market is comprised of customers who
buy products for their own use.
• Business market consists of customers who buy
products for use in a business.
Business Provides Products
• Meet needs and
satisfy wants
• Provide utility
(characteristics of a
product that satisfy
wants and needs) or
usefulness
5 Types of Utility
1. Form (when a business changes the form of a good
or service to make it more useful)
2. Place (when products are available at convenient
places)
3. Time (when products are made available at times
that customers need and want them)
4. Information (when facts and details about a
product are made available)
5. Possession (when it becomes easier for customers
to acquire a product)
Business Creates Markets
Anywhere buyers and sellers meet to buy and
sell goods and services
Business Generates Economic Benefits
(Gains that are measured in terms of money)
1. The main reason businesses operate is to earn

a profit. (Difference between the income
earned and expenses incurred by a business
during a specific period of time.)
2. Employment to earn wages (money earned in
exchange for work)
3. Determines standard of living (level of material
comfort measured by the goods, services, and
luxuries available.
FUNCTIONS OF BUSINESS
Production
Finance
Marketing
Management
Production
• Any activity related
to make a product
• Farming, mining,
construction, and
manufacturing, etc.
Finance
• All business activities
that involve money
• Receiving money
from customers,
paying money to
suppliers, paying
wages to employees,
etc.
Marketing
• All activities that
identify, anticipate,
and satisfy customer
demand while
making a profit.
• Focus on customers
Management
• Process of
controlling and
making decisions
about a business
• All activities required
to plan, coordinate,
and monitor a
business
• Hiring and training
employees
YOU DO!
How do the
principles of
economics apply
to business?
I Can . . .
• Explain the importance of economics
• Describe the four economic systems
• Discuss the impact of market forces on
businesses
ECONOMICS
• A science that examines how goods and
services are produced, sold, and used
• Involves how people, governments, and
businesses make choices about using limited
resources to satisfy unlimited wants
• Helps businesses make better plans and
decisions
Economic Resources
• All are limited.
• Factors of production are the economic
resources a nation uses to make goods and
supply services for its population.
• Land, labor, capital, and entrepreneurship
Word Studies
Land Labor
Entrepreneurshi
Capital
p
Factors of Production
Land Labor Capital Entrepreneurship
• Soil • Agricultural • Tools • Business

• Water workers • Equipment owners
• Minerals • Construction • Machinery
• Plants workers • Buildings
• Animals • Factory • Vehicles
• Climate workers • Transportation
• Miners systems
• Professionals • Utilities
• Service
workers
Teamwork (They Do)
• Working as a team, select a product that uses
multiple resources in its production.
• Describe how each factor of production was
used to create the end product.
Economic Problem
• Making choices about using limited resources to
satisfy unlimited wants
• Scarcity develops when demand is higher than the
available resources.
• Scarcity forces choices to be made.
• Trade-off (when something is given up in order to
gain something else)
• When this occurs, an opportunity cost is created.
(value of the next best option that was not selected)
“Everybody got choices . . .”
• When making economic decisions, a
systematic decision-making process can help
identify the best option.
• Process of choosing an option after evaluating
the available information and weighing the
costs and benefits of the alternatives.
Steps in the Decision-Making Process
Define the problem or challenge
Research alternatives
Chose the best alternative
Implement the decision
Evaluate the decision

Economic Systems
• An organized way in which a nation chooses to
use its resources to create goods and services.
1. What should we produce?
2. How should we produce it?
3. For whom should we produce it?
• Develops around the way it deals with
scarcity.
(1) Traditional Economy
• Economic decisions are based on a society’s
values, culture, and customs.
• Existed early in human history, still found in
underdeveloped nations
• Usually no manufacturing
• Most trade or barter
(2) Command Economy
(Centrally-Planned)
• Government makes all the economic decisions
for its citizens
• Found in communist and socialist societies
• Government owns and controls all factors of
production
• North Korea, Cuba
(3) Market Economy
(free enterprise, private enterprise or consumer economy)
• Individuals are free to make their own

economic decisions
• Characteristics
– Private property
– Profit
– Economic freedom
– Voluntary exchange
– Competition
Fill in the blanks! (You Do)
_________________
__________________ _________________
Free
Enterprise
System
_________________ _________________
The U.S. has maintained the largest market
economy of the 20th and 21st centuries.
• Capitalism is
another name for the
US economic system.
• Economic resources
are privately owned
by individuals rather
than the
government.
(5) Mixed Economy
• Both the government and individuals make
decisions about economic resources
• Many economies are mixed, having elements
of both command and market.
• What does that look like? Provide an example.
Market Forces
• Economic factors that affect the price,
demand, and availability of a good or service.
• In free enterprises, this results in the
production of the best goods and services at
the most attractive prices.
• Includes supply and demand, profit motive,
and competition
Supply and Demand
• Critical because it
determines the price of
goods and services
• Supply (quantity of
goods available for
purchase)
• Demand (quantity of
goods that consumers
want to purchase)
The Law of Supply and Demand
• The price of a product is • An increase in supply
determined by the often lowers prices
relationship of the supply
• Decrease in supply
of a product and the
demand for the product. usually increases prices
• Applies to a constant • The market price is
environment determined at the point
• Higher demand results in where supply equals
higher prices demand for a product
• Lower demand results in (equilibrium)
lower prices
The Supply Curve
• Shows that producers are willing to supply a
greater quantity of goods at higher prices.
The Demand Curve

• Shows that consumers are willing to buy fewer
goods at higher prices
• Market price is the point at which the supply
and demand are equal.
• Equilibrium is where the supply curve and
demand curve intersect.
Label the Supply and Demand Curve (You Do)
1. Demand
2. Supply
3. Equilibrium
4. Market
Price
Supply and Demand Influences
Shortage Surplus
• Demand for a product • Demand for a product
becomes greater than the becomes less than the
available supply available supply
• Consumers compete to buy • Sellers compete to sell the
the available supply available supply
• Forces the price up • Forces price down
Demand can also be influenced by changes in society.

Profit Motive
Even though many businesses are created
because the owners are looking for personal
satisfaction, independence, and other
advantages, profit is the driving force.
Competition
• Action taken by two or more businesses
attempting to attract the same customers
• Business must work to win each customer’s
business because of the freedom of customers
to choose the goods and services they buy.
THE
END

Chapter 3A Business and Economics

Uploaded by

Copyright:

Available Formats

Chapter 3A Business and Economics

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Chapter 3A Business and Economics

Uploaded by

Copyright:

Available Formats

INTRODUCTI

AgEntrep 313 – INTRO TO AGRI COMMODITY & ENTREPRENEURIAL DEVELOPMENT

UNIVERSITY OF SCIENCE AND TECHNOLOGY OF SOUTHERN PHILIPPINES - CLAVERIA

1. The main reason businesses operate is to earn

• Soil • Agricultural • Tools • Business

Chose the best alternative

Implement the decision

Evaluate the decision

• Individuals are free to make their own

The Demand Curve

Demand can also be influenced by changes in society.

You might also like