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Discuss the role of small business and entrepreneurship in the economy. Describe economic systems. PowerPoint PPT Presentation


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1.1. Discuss the role of small business and entrepreneurship in the economy. Describe economic systems. Explain how economics is about making choices. Discuss the role of economic indicators and business cycles. Describe what entrepreneurs contribute to the economy.

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Discuss the role of small business and entrepreneurship in the economy. Describe economic systems.

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Discuss the role of small business and entrepreneurship in the economy describe economic systems

1.1

  • Discuss the role of small business and entrepreneurship in the economy.

  • Describe economic systems.

  • Explain how economics is about making choices.

  • Discuss the role of economic indicators and business cycles.

  • Describe what entrepreneurs contribute to the economy.

Section 1.1 Entrepreneurship and the Economy


Small business and entrepreneurship

Small Business and Entrepreneurship

As an entrepreneur, you accept the risks and responsibilities of business ownership.

entrepreneuran individual who undertakes the creation, organization, and ownership of a business

Section 1.1 Entrepreneurship and the Economy


Small business and entrepreneurship1

Small Business and Entrepreneurship

Creating and running a business venture requires a variety of skills.

venture - a new business undertaking that involves risk

Section 1.1 Entrepreneurship and the Economy


Small business and entrepreneurship2

Small Business and Entrepreneurship

Starting a home-based business calls for entrepreneurshipon the part of the owner.

entrepreneurshipacting like an entrepreneur or having an entrepreneurial mind-set

entrepreneurialthe process of recognizing an opportunity, testing it in the market, and gathering resources necessary to go into business

Approximately one in three households is involved in an entrepreneurial enterprise.

Section 1.1 Entrepreneurship and the Economy


Small business and entrepreneurship3

Small Business and Entrepreneurship

Knowledge of economicscontributes to an understanding of how entrepreneurs and customers interact.

economicsthe study of how people allocate scarce resourcesto fulfill their unlimited wants

An economic system includes a set of laws, institutions, and activities that guide economic decision making.

Section 1.1 Entrepreneurship and the Economy


All economic systems attempt to answer four basic questions

Economic Systems

All economic systems attempt to answer four basic questions.

?

?

What goods and services should be produced?

What quantity of goods and services should be produced?

?

?

Howshould goods and services be produced?

For whom should goods and services be produced?

Section 1.1 Entrepreneurship and the Economy

6


The free enterprise system the profit motive

The Free Enterprise System & The Profit Motive

Most democratic nations have a free enterprise system.

  • free enterprise system(also known as capitalism or market economy) an economic system in which people have the right to choose:

  • what products to buy

  • to own private property

  • to choose to start a business and compete with other businesses

Making a profit is a primary incentive of free enterprise.

profit - money that is left over after all expenses of running a business have been deducted from the income

Section 1.1 Entrepreneurship and the Economy


Competition

Competition

The role of competitionis a key element in a market economy. It helps to ensure lower prices, as well as higher quality, better service and reputation.

Perfect competition is a market structure in which there are numerous buyers and sellers and no single buyer or seller can affect price.

market structurethe nature and degree of competition among businesses operating in the same industry; market structure affects market price


The free enterprise system

The Free Enterprise System

The government may grant a temporary monopoly to an inventor.

monopolya market structure in which a particular commodity has only one seller

Section 1.1 Entrepreneurship and the Economy


The free enterprise system1

The Free Enterprise System

Under antitrust laws, some forms of oligopoly areillegal.

oligopolya market structure in which there are just a few competing firms

Section 1.1 Entrepreneurship and the Economy


Think pair share

Think-Pair-Share

Turn to a partner and discuss the following question:

What role does the profit motive and competition play in the free enterprise system? What is it’s impact on business?

Random groups will be asked to share their answers.

3 Minutes


Goods and services

Goods and Services

Goods and services are the products of our economic system.

goodstangible(or physical) products of our economic system that satisfy consumers’ wants and needs

servicesintangible(nonphysical) products that satisfy consumers’ wants and needs

goods

services

Section 1.1 Entrepreneurship and the Economy


Goods and services1

Goods and Services

Entrepreneurs respond to consumers’ wants and needs with goods and services.

wantsomething that you do not have to have for survival, but would like to have

needa basic requirement for survival

Section 1.1 Entrepreneurship and the Economy


Scarcity

Scarcity

The principle of scarcity means giving up one thing in order to have something else.

scarcitythe difference between demand and supply; limited resources

Section 1.1 Entrepreneurship and the Economy


Supply and demand theory

Supply and Demand Theory

In a free enterprise system, the price of a product is determined by demand.

demandthe quantity of goods or services that consumer are willing and able to buy at various prices

Section 1.1 Entrepreneurship and the Economy


Supply and demand theory1

Supply and Demand Theory

The degree to which demand for a product is affected by its price is either governed by elastic demand or inelastic demand.

elastic demand situations in which a change in price creates a changein demand

inelastic demand situations in which a change in price has little or no effect on demand for products

Section 1.1 Entrepreneurship and the Economy


Supply and demand theory2

Supply and Demand Theory

Due to the law of diminishing marginal utility, even when a product’s price is low, people will not keep buying it indefinitely.

diminishing marginal utilitythe effect or law that establishes that pricealonedoes not determine demand, and other factors, such as income, taste, and the amount of product already owned, play a role as well

Section 1.1 Entrepreneurship and the Economy


Supply and demand theory3

Supply and Demand Theory

supplythe amount of goods or services that producers are willing to provide

Supply is continually shifting in the marketplace.

Supply and Demand Theory

high demand + short supply = prices go up.

heavy supply + short demand = prices go down.

Section 1.1 Entrepreneurship and the Economy


Supply and demand theory4

Supply and Demand Theory

Because supply and demand are continually shifting in the marketplace, the change creates surpluses, shortages, and equilibrium.

equilibrium the point at which consumers buy all of a product that is supplied; at this point, there is neither a surplus nor a shortage

Section 1.1 Entrepreneurship and the Economy


Economic indicators and business cycles

Economic Indicators and Business Cycles

There are four stages of the business cycle: growth, recession, depression, and recovery.

business cycle the general pattern of expansion and contraction that the economy goes through

Section 1.1 Entrepreneurship and the Economy


Discuss the role of small business and entrepreneurship in the economy describe economic systems

Check Your Understanding

1. What are some ways that entrepreneurs affect the economy?

2. What are some examples of elastic and inelastic goods and how do they differ?

3. Explain the relationship between cost and profit and supply and demand

Section 1.1 Entrepreneurship and the Economy


Deca role play practice

DECA Role Play Practice

  • Pick a partner.

  • Read the Role Play found on page 16.

  • Work as a team to create a presentation (focusing on the performance indicators).

  • Record your notes to be used in the presentation; will be collected for points.

  • Random group(s) will be called on to present.


Discuss the role of small business and entrepreneurship in the economy describe economic systems

1.2

  • Discuss the five components of the entrepreneurial start-up process.

  • Explain how to achieve business success.

Section 1.2 The Entrepreneurial Process


Discuss the role of small business and entrepreneurship in the economy describe economic systems

An idea plus a market equals an opportunity.

1.2

The entrepreneurial start-up process includes:

  • the entrepreneur

  • the environment

  • the opportunity

  • start-up resources

  • the organization

Section 1.2 The Entrepreneurial Process


The entrepreneur

The Entrepreneur

The five components of the entrepreneurial start-up process work together to create a new business.

The entrepreneur is the driving force of the start-up process. Entrepreneurs recognize opportunities and pull together the resources to exploit opportunities.

Section 1.2 The Entrepreneurial Process


Discuss the role of small business and entrepreneurship in the economy describe economic systems

The nature of the environment

The availability of resources

Ways to realize value

Incentives to create new businesses

The Environment

Four Categories of Environmental Variables

Section 1.2 The Entrepreneurial Process

26


The environment

The Environment

New businesses seek enterprise zones that provide incentives.

enterprise zones specially designated areas of a community that provide tax benefits to new businesses locating there; communities may also provide grants for new product development

Section 1.2 The Entrepreneurial Process


Start up resources

Start-Up Resources

start-up resources the capital, skilled labor, management expertise, legal and financial advice, facilities, equipment, and customers needed to start a business

When entrepreneurs are ready to start up a new business, they must use creative talent to put together the necessary start-up resources.

A good opportunity can be turned into a business.

opportunity an idea that has commercial value

Section 1.2 The Entrepreneurial Process


The organization

The Organization

The fifth component of the start-up process is the execution of the new venture organization.

new venture organization the infrastructure or foundation that supports all the products, processes, and services of a new business

Section 1.2 The Entrepreneurial Process


The facts about business failure

The Facts About Business Failure

Most new businesses fail -

MYTH!!

The truth is more will succeed than fail.66% survive the first 2 years.

A business failure files Chapter 7 bankruptcy.

business failure a business that has stopped operating, with a loss to creditors, and one that no longer appears on the tax rolls

discontinuance a business that disappears from the tax rolls because it may be operating under a new name or because the owner has purposely discontinued in order to start a new business

A business that disappears from the tax rolls may be a failure or a discontinuance.

Section 1.2 The Entrepreneurial Process


Discuss the role of small business and entrepreneurship in the economy describe economic systems

How Entrepreneurs Can Succeed

  • Plan and manage effectively

  • Assemble an expert team to execute the business concept

  • Test the opportunity in the marketplace

  • Recognize opportunity

Section 1.2 The Entrepreneurial Process

31


Discuss the role of small business and entrepreneurship in the economy describe economic systems

Check Your Understanding

Ch 1.2

1. What are the five components of the process of new venture creation?

2. How does an enterprise zone encourage new business?

3. Why shouldn’t discontinuances be counted as business failure?

Section 1.1 Entrepreneurship and the Economy


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