A Look at Wants and Needs

Wants and Needs Drive the Economy

• Wants and needs determine what products and services businesses provide.

  • Wants are things that you do not have to have to survive, but would like to have.

  • Needs are things that you must have in order to survive.

    • The basic needs of people include food, water, shelter, and clothing.

• A group of people may share the same wants.

  • A business may want an advanced computer system.

  • Although these wants are shared, they are considered private wants

  • Individual people also have private wants.

• Public wants are wants that are widely shared by many people.

  • Examples include highways, public libraries, and parks.

  • Local, state, and federal governments satisfy public wants.

• Businesses provide goods and services to satisfy wants and needs.

  • Goods are physical products.

  • Services are tasks that businesses perform for consumers.

How Resources Limit the Ability to Satisfy Wants and Needs

• The more money you make, the more goods or services you can buy.

• However, few people have enough resources to satisfy all of their wants.

• Resources are items that people can use to make or obtain what they need or want.

  • Resources limit the number of needs and wants people can satisfy.

• To make the best use of limited resources, determine what your needs are and satisfy them first.

Making the Most of Your Resources

• You can make the most of your resources by making the best choices about what to buy.

• The decision-making process can help you make good choices.

  • It helps you to identify and consider your various alternatives and their consequences before you make a final decision.

    1. Identify the situation

    2. Identify possible courses of action

    3. Determine the pros and cons

    4. Make a decision

    5. Evaluate your decision

• The longer a decision will affect your life, the more you need to evaluate your options and consider the possible consequences.

• Businesses must make thoughtful decisions that are consistent with their goals.

• Most companies allow managers to make routine decisions independently.

• Higher-level business managers usually make more important decisions that affect the future of their companies.

Business Activities

How to Define Business

• Business is any commercial activity that seeks profit by providing goods and services to others in exchange for money.

• Profit is the money left over after a business has paid the cost of providing its goods and services.

• Businesses provide consumers and other businesses with necessities, such as food, clothing, housing, medical care, and transportation.

  • Businesses also provide goods and services that make life easier and better.

• For entrepreneurs, owning a business also offers an opportunity to earn a good living.

• Profit is the reward for satisfying the needs and wants of consumers and businesses.

• The wealth created by businesses benefits the entire community because businesses pay taxes and provide jobs.

• Companies thrive on competition, the contest between businesses to win customers.

  • Competition is possible because companies have the freedom to produce the products they think will be the most profitable.

• The result is that goods and services are produced and sold at the lowest possible cost.

• For companies to successfully compete in the global economy, they must offer quality products with outstanding service at competitive prices.

Business Activities

• Some business activities are:

  • identify opportunities for products or services;

  • evaluate the demand for products or services;

  • obtain start-up money and operating capital;

  • manage the production of goods and/or services;

  • market the goods and/or services;

  • keep records to satisfy government requirements and improve processes.

• Some business activities should be supported by market research.

• Market research is the act of gathering and analyzing information about the wants, needs, and preferences of consumers in a certain market.

  • Market research provides information that can help a business identify opportunities, analyze demand, and respond to consumer demand for goods and services.

Business and You

• A consumer is a person who uses goods or services.

• Businesses also affect consumers when they modify or discontinue products.

• The decision to stop manufacturing products is often because there is a decreasing demand for them.

• Businesses affect you as a wage earner.

• Consumers also affect businesses.

• Consumers decide what kinds of goods and services they want and where they will buy them.

• To avoid failure, a business can modify its products, services, and business practices to satisfy consumers.