1.3 what is Entrepreneurship
1.Entrepreneurship and the Economy
2.The Entrepreneurial Process
1.Entrepreneurship and the Economy
Section Objectives
Define the role of small business (SMEs) and entrepreneurship in the economy.
Compare and contrast economic systems.
Explain how economics is about making choices.
Define the role of economic indicators and business cycles.
Describe what entrepreneurs contribute to the economy.
The Main Idea
Entrepreneurship is the primary catalyst for economic growth.
Being a successful entrepreneur requires an understanding of how the economy works.
Content Vocabulary
Entrepreneur venture entrepreneurship entrepreneurial economics
free enterprise system profit oligopoly goods
services need want factors of production scarcity
market structure monopoly demand elastic demand inelastic demand
diminishing marginal utility supply equilibrium Gross Domestic Product business cycle
Small Business and Entrepreneurship
- As an entrepreneur, you accept the risks and responsibilities of business ownership.
Entrepreneur an individual who undertakes the creation, organization, and ownership of a business
- Creating and running a business venture requires a variety of skills.
Venture a new business undertaking that involves risk
- Starting a home-based business calls for entrepreneurship on the part of the owner.
About one in three households is involved in an entrepreneurial enterprise.
Entrepreneurial the process of recognizing an opportunity, testing it in the market, and gathering the resources necessary to go into business
Entrepreneurship Today
Knowledge of economics contributes to an understanding of how entrepreneurs and customers interact.
Economics the study of how people allocate scarce resources to fulfill their unlimited wants
Economic Systems
An economic system includes a set of laws, institutions, and activities that guide economic decision making.
- 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?
How should goods and services be produced?
For whom should goods and services be produced?
The Free Enterprise System
- Most democratic nations have a free enterprise system.
free enterprise system
an economic system in which people have important rights: to make economic choices of what products to buy, to own private property, and to choose to start a business and complete 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
- Perfect competition is a market structure in which there are numerous buyers and sellers and no single buyer or seller can affect price.
market structure
the nature and degree of competition among businesses operating in the same industry; market structure affects market price
- The government may grant a temporary monopoly to an inventor.
monopoly
a market structure in which a particular commodity has only one seller
- Under antitrust laws, some forms of oligopoly are illegal.
oligopoly
a market structure in which there are just a few competing firms
Basic concepts of economics
goods and services
factors of production
scarcity
supply and demand theory