Entrepreneurship 3209 Scarcity Definition of scarcity Systems of

Entrepreneurship 3209

Scarcity �Definition of scarcity

�Systems of economics: ◦ A way of dealing with the selection, production, distribution, and consumption of goods and services in society. ◦ Government and business work together to foster activity and growth in the marketplace.

�Subsistence Economy ◦ Produces only enough output for its own consumption and does not attempt to accumulate wealth �Barter Economy ◦ Lacks a commonly accepted currency, so all exchanges must be made with goods and services because money does not exist �Market Economy ◦ Economy where there is free competition and prices are determined by the interaction of supply and demand.

Money? �All money has 3 common characteristics: ◦ It serves as a medium of exchange ◦ It is a unit of account ◦ It is a store of value.

What is “Business”? �The process of using resources to provide a good or service to help meet the needs and wants of consumers with the intent of earning a profit. �Synonyms: enterprise, firm, company, organization.

Supply and Demand �Demand ◦ Quantity of a good or service that consumers are willing to buy at a particular price �Law of Demand ◦ Demand goes up when prices go down. ◦ Demand goes down when prices go up.

What creates demand? �Consumers must know about it and be interested in it (marketing and ads help) �Businesses must have enough supply �Must make prices reasonable and competitive �Must be accessible to purchase (Location!)

Supply �Supply ◦ Quantity of goods and services consumers demand can be provided at prices they are willing to pay �Law of Supply: ◦ Supply goes up when prices go up. ◦ Supply goes down when prices go down.