BBI-INTRODUCTION TO BUSINESS

CHAPTER 1- ECONOMIC BASICS

Key Words: purchasing power, needs, wants, inventory, decision-making model, economic resources (natural resources, human resources, capital resources), interdependence, economic systems.

Consumers Influence on Price

When business are in control of a product they have purchasing power. Purchasing power means they can charge high prices and raise prices when costs go up.

We all have basic needs. basic needs include food, shelter and clothing.

A company has to know how much inventory it needs to safety the needs and wants for consumers. Inventory, sometimes called stock, is the quantity of goods and materials kept on hand.

A business has to follow a five steps decision of making model:

1. Define the decision to be made.
2. Identify the alternatives.
3. Evaluate the alternatives
4. Make a decision and take action.
5. Evaluate the decision.