Economic Principles From: foukeffa.org

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Economic PrinciplesFrom foukeffa.org

• GA Ag Ed Curriculum Office
• To accompany the Georgia Agriculture Education
  Curriculum Lesson 03452-8
• July 2002

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Objectives

• Define economics and explain economic systems
• Describe free enterprise
• List and explain 3 ways of doing business
• Explain entrepreneurship

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Questions Headings and Subheadings

• What is economics?
• Define and describe supply and demand.
• How does price effect economics?
• What importance does money play in economics?
• Explain the economic system.
• Explain free enterprise.
• Describe business ownership.

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Questions cont

• What choices are available in a free enterprise
  system?
• What kind of control issues are present in free
  enterprise?
• List 3 ways of doing business.
• Describe sole proprietorship.
• Describe partnerships.
• What is a corporation?

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Questions cont

• How do consumers affect competition?
• Who are consumers?
• Define Entrepreneurship?

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Terms

• business
• competition
• consumer
• cooperative
• corporation
• demand
• dividend
• economic system
• economics
• entrepreneurship

• free enterprise
• money
• monopoly
• partnership
• price
• private ownership
• property
• risk
• sole proprietorship
• supply

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What is Economics?

• The study of how people get what they want
• Includes producing goods and services and getting
  them to people
• Money and resources are scarce
• Governments have systems to care for people
• Work is required to produce and make money
• Includes supply, demand, prices money

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Supply Demand

• Prices vary with supply of something as related
  to demand for it
• Supply and demand work together in setting price
• Both are limited
• supply ?, demand ?
• supply ?, demand ?

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Supply versus Demand

• Supply
• Amount of something that is available
• Can be reduced by disasters
• Supply ?, Price ?

• Demand
• Amount of something that will be bought at a
  given price
• Price ?, Demand ?
• Price must cover costs of production

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Graph Plotting

• Price ?, Demand ?, Supply ?
• Price ?, Demand ?, Supply ?

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How Price Affects Economics

• Price is the amount of money involved in buying
  and selling a good or service
• Worth of the item in money

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Moneys Importance in Economics

• Money is anything exchanged for goods or services
• Currency is money used in a country
• The value of money is how much it will buy
• Change in prices can cause change in the value of
  money

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The value of money

• 1 .43 (2000)
• 1 20 (1930s- 40s)
• 1 week wages 40 hours 1930
• Car 3600
• House 10,000

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The Economic System

• Economic system is how people go about doing
  business
• How things are created, owned, or exchanged
• All countries have economic systems just modified
  in some way to meet their particular needs
• Capitalism versus communism
• Major differences are based on property
  ownership and control

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Free Enterprise

• Free enterprise the way of doing business in the
  United States
• Allows for business to work with minimum
  governmental control
• Allows people to work and make money for
  themselves
• Many people own property

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Property Ownership

• Private ownership is having things people can
  call their own
• Property is anything with value
• Types of property
• Real is land and its natural features
• Personal are items people personally use

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Business Ownership

• A business is a person or group that produces
  and/or sells goods and services
• People who own businesses take risks
• A risk is the possibility of losing what has been
  invested
• You also can benefit from a risk by making money

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Available Choices Within Free Enterprise

• You can choose what to produce, buy, and sell
• You can set your price and be somewhat flexible
• Decisions require a lot of information

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Control Issues Present in Free Enterprise

• Few government controls
• You can run the business as you chose, but
  dishonesty is unacceptable
• Standards are imposed
• Help keep food clean and measured
• People want a full portion of what they pay for

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3 Types Businesses

• Sole proprietorship
• Partnership
• Corporations

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Sole Proprietorship

• Business owned by 1 person
• Responsible for all areas of operations
• hire, fire, buy, sell, supervise, submit
  government forms and all other work
• Must have all the money to start the business

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Partnerships

• Co-owners
• Business owned by 2 or more people
• Profits and losses are split equally between all
  members

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Corporation

• Association of members doing business
• Chartered by a state government
• People who buy stock are called stakeholders or
  stockholders and elect a Board of Directors to
  run the corporation
• Paid dividends (part of the profit)
• Cooperatives provide members with services -
  marketing co-ops help market farm products

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How Consumers Affect Competition

• Businesses must have customers to buy goods and
  services

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Consumers

• Determine what type of business
• If consumers wont buy a product, it wont be
  produced
• A consumer is a person, business, or agency that
  uses goods and services
• All consumers have limited money and must decide
  how it will be spent

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Competition

• Consumers will choose what they like best
  compared with its cost
• Competition allows consumers to choose between
  similar products
• Monopoly exists if one producer controls products
• Not good in free enterprise systems
• Advertising influences what people will buy
• Never use untruthful advertising

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Entrepreneurship

• Creating goods or services to meet a unique need
• New things
• An Entrepreneur is a person who takes risks in
  creating and developing new products and ways to
  market them
• Must be a very creative person with creative ideas

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Test Your Knowledge

• What is economics?
• How does supply/demand relate to the prices
  consumers pay?
• What is currency? Name the currency in 3
  countries?
• Why is creating goods and services a goal for any
  nation?
• What is the difference between real and personal
  property?

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Test Your Knowledge cont

• What are the ways of doing business? Explain
  each.
• Who are consumers and why do they play a valuable
  role?
• What is the difference between competition and a
  monopoly?
• What is entrepreneurship?

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Match Answers to Correct Statement
Economics Supply Demand
Money Price Free Enterprise Risk
Partnership Dividend Cooperative

• Profit paid to a stockholder in a corporation
• Study of how people get what they want
• Amount of product that will be sold at a given
  price
• Anything exchanged for goods and services
• Amount of money used in buying or selling a good
  or service
• Amount of goods or services available
• A business owned by 2 or more individuals
• Freedom to do business with a minimum of
  government control
• The possibility of losing something

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Chapter 5 test

• 1.What is economics?
• 2.Define and describe supply and demand.
• 3.How does price affect economics?
• 4.What importance does money play in economics?
• 5.Explain an economic system.

• 6.Explain free enterprise.
• 7.What is the difference between property and
  business ownership?
• 8.List 3 ways of doing business and explain all
  3.
• 9.Who are consumers and what is their role?
• 10. Entrepreneurship important, why?