Basic Economic Questions What every economy, business and consumer must answer! How do businesses make money?

Basic Economic Questions

• What every economy, business and consumer must answer!

How do businesses make money?

• Businesses make money by selling goods and services
• What are Goods and Services?

Goods

• Goods are physical objects such as:
• Computers
• Sneakers
• Cars

Services

• Services are actions that a person performs for another person.
• Teaching
• Cleaning
• Fixing my car

Economic Questions

• All economies, businesses and people must answer the following questions:
• What goods and services will be produced?
• How will the goods and services be produced?
• Who are the goods and services for?
• How much will be produced now and how much later?

What are resources?

• Resources are the materials from which goods and services are made.
• There are 3 types of resources.

1. Human Resources

• A person’s knowledge, skills, attitudes and abilities determine that individual’s value as a human resource. The more rare the skill, knowledge etc. the more valuable and higher pay.
• Ex. Unskilled workers- low pay
• Teachers- high level of education, higher pay
• Doctors- a lot of education and rare skills, well paid
• NFL quarterbacks- rare physical abilities, very well paid

2. Natural Resources

• Raw materials from which goods and services are made.
• Land
• Timber
• Oil

3. Capital Resources

• Money and property used to produce goods and services
• Tools
• Buildings
• Machines

My Pizzeria

• Imagine we start a pizza business. What are the
• Human Resources
• Natural Resources
• Capital Resources

Human Resources

• A Manager
• Pizza maker (cook)
• Cashier
• Dishwasher
• Delivery person
• Who will get paid the most? Why?

Natural Resources

• Flour
• Cheese
• Vegetables
• Meat and other toppings
• Tomato Sauce
• Gas for pizza oven
• Water
• Electricity

• Paper Plates
• Paper Napkins
• Note: these items are used once, then disposed of.

Capital Resources

• Building/Storefront for the restaurant
• Pizza Oven
• Cash register
• Counter
• Refrigerator/Freezer
• Re-usable plates
• Re-usable napkins (cloth)
• Car for deliveries

Create a Business

• What goods or services will you provide?
• What is the name of your business?
• Where will you locate your business?
• Why did you choose this location?
• List the human, natural and capital resources you’ll need.