1. BUSINESS BASICS
Final

2. An entrepreneur is
a risk-taker in
search of profits.

3. COMMUNICATION = SUCCESS
LISTENING GAINS RESPECT
KNOWLEDGE IS POWER
WHAT YOU WISH YOU KNEW
YOU’RE GOING TO LEARN!!!!

4.  Economics – study of how people seek to satisfy their needs and
wants by making choices.
 Needs – something that is necessary for survival (air, food, clothing,
and shelter).
 Wants – items that we desire, but are not essential to survival.
 Goods – physical objects such as shoes, books, cars, etc.
CHAPTER 1: Vocabulary

5. Services – actions or activities that one person
performs for another (barber, dentist, teacher,
waitress).
Scarcity – all goods and services that we produce
are scarce, it implies limited quantities of
resources to meet unlimited needs.
Shortage – when producers will not or cannot
offer goods and services at the current prices.
Surplus - In excess of what is needed or required

6. A need is a basic requirement for
survival and includes food, water
and shelter.
A want is a way of expressing a
need. Since a variety of wants can
satisfy a need, wants tend to be
broader than needs.

7. THE BUSINESS FLOW
A market is a mechanism that allows
buyers and sellers to exchange a certain
economic product.
Factor Markets – are where productive
resources are bought and sold.
Product Markets – are where producers
sell their goods and services to
consumers.

13. LAND
The entire material
universe exclusive of
people and their products
◦Everything physical
(other than human beings)
which is not the result of
human effort is within the
economic definition of
land.

14. LABOR
• **All human exertion in the production of
wealth
• All who participate in production by their
mental and/or physical effort are laborers
in the economic sense. This would include
their efforts, abilities and skills.

15. CAPITAL
Wealth used to produce more
wealth, or wealth in the course of
exchange.
A machine is wealth. If used to
produce shoes or other wealth, the
machine is wealth that is capital
(capital good). So also would a
merchant’s stock (inventory) of
goods in trade be capital because
the final exchange is not been
completed.

16. PRODUCTION
• When all factors of production (land, labor, capital
and entrepreneurship) are present, production, or
the process of creating goods and services, can take
place.
• Note!! Everything we produce require these factors.
GDP –The total production of goods and services
created within a country during a calendar year.
gross domestic product (GDP)

17. The Factors of Production
All the processes involved in
making wealth and bringing
it from its place of origin to
the ultimate consumer.
• Land
• Labor
• Capital
• Entrepreneurship

18. A free enterprise economy
is an economic system where businesses can
operate competitively with minimal
government regulations and consumers
choose to purchase what they desire.
Standard of Living is the quality of life
based on the possessions of the necessities
and luxuries that make life easier.

19. Basic Business Concepts
Goods – items that are economically useful
or satisfies an economic want
Consumer Goods – used by individuals to
satisfy personal needs
Capital Goods – Goods used to produce
other goods (Machines and tools)
Services – work that is preformed for
someone or an act of assistance
Consumer(s) – a person who uses a good or

20.  MARKET SYSTEM – interaction of buyers and sellers,
determines prices of most goods and quantities
purchases.
 DEMAND – desire to buy something and the ability to
pay for it.
 LAW OF DEMAND – when prices go down, quantity
demanded goes up…also…when prices go down, the
quantity available goes down
DEMAND

21.  DEMAND SCHEDULE – table listing quantities
of goods purchased at given market prices
(individual/ market)
 DEMAND CURVE – graphic representation of a
Demand Schedule
MORE ON DEMAND…

22. Value – worth that can be
expressed in dollars
Utility – the capacity to be
useful and provide
satisfaction
Wealth – is the accumulation of
products that are tangible, scarce,
useful, and transferable from one
person to another.

24. COSTS OF PRODUCTION THAT INCLUDE FIXED &
VARIABLE
1. FIXED COSTS – a cost that does not change no matter
how much of a good is produced (Rent, Property Taxes,
Salaries)
2. VARIABLE COSTS – are costs that rise or fall depending
on the quantity produced (Electricity & Heat)
3. TOTAL COST – Fixed Costs plus Variable Costs
4. MARGINAL COST – additional cost of producing one
more unit of any product
5. OPERATING COST – the cost of operating a facility, such
as a store or school.(Rent, utilities, inventory, advertising,
salaries)
6. MARGINAL REVENUE – the additional income from
selling one more unit of a good; sometimes = to price
PRODUCTION COSTS

25. Business growth occurs when a
nation’s total output of goods
and services increases over time.
Business productivity is a
measure of the amount of output
produced by a given amount of
inputs during a specific period
of time.

26. Human Capital is the sum of the skills,
abilities, health, and motivation of people.
Government & Businesses can invest in
human capital (labor) by providing
education (training) and health care to
improve the skill and motivation of its
workers.

27. Every decision we make has its trade-offs or
alternative choices. When you make an
economic decision (a choice) opportunity
cost are incurred.
Opportunity Cost
The value of what you give up
when you make a choice.
Opportunity Benefit
The value of what you gain by
making that choice.

29. {
The fundamental economic problem
facing all societies is Scarcity.
Scarcity is the condition that results
for society not having enough
resources to produce all the things
people would like to have.

30. BUSINESS BASICS