Lesson Planning Guide - WordPress.comSM:001/CS) DECA If DECA is already established in your school,...

Chapter ObjectivesAfter studying this chapter, students will be able to• identify economic needs and wants.• describe the three uses of money.• explain how business satisfi es economic needs.• describe the three forms of business ownership.• describe the difference between a for-profi t corporation and a nonprofi t corporation.• list the four functions of business and give an example of each.• explain the role of marketing in business.

Student Text OutlineIntroductory Text

I. Economic Needs and Wants

II. The ExchangeIII. Money A. Medium of Exchange B. Unit of Value C. Store of WealthIV. What Is Business?V. Goal of BusinessVI. Forms of Business Ownership A. What Is a Corporation? B. What Is a Nonprofi t Corporation?

VII. The Functions of Business A. Production B. Finance C. Marketing D. Management

Terms

needwanteconomic needs and wantseconomic goods and servicesexchangemoneyvaluetime value of money

businessprofi tsole proprietorshippartnershipcorporationnonprofi t corporationproductionfi nancemanagement

Teaching ResourcesWB: Terms, Activity AMEH: Activity Buffet—Reading and Vocabulary

WB: Making Change, Activity C (math)

TR: The World of Corporations, Master 2-1 (project)

WB: Business Functions at “Lassie and Morris,” Activity BTR: The Four Functions of Business, Master 2-2 (transparency)

Review and AssessmentStudent TextReality Checks, pp. 33, 35, 36, 37Chapter Review, pp. 40–41

Review Concepts, Think Critically, Connect to Business, Explore Careers, Connect to the Internet

Teaching ResourcesWB: Terms, Activity ATR: Chapter 2 Test, Reproducible Test MasterTR: Chapter 2 Review and AssessMEH: Activity Buffet—Assessment, Content Review, and GamesEV: ExamView® Assessment Suite CD

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Lesson Planning GuideChapter 2Business Basics

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Business Administration and Marketing Performance Indicators

• Describe the concepts of economic scarcity and economic activities. (EC:001/CS)• Distinguish between economic goods and services. (EC:002/CS)• Describe functions of money (medium of exchange, unit of measure, store of value). (FI:060/PQ)• Explain the time value of money. (FI:062/CS)• Identify factors affecting a business’s profi t. (EC:010/CS)• Explain the role of business in society. (EC:070/CS)• Explain types of business ownership. (BL:003/CS)• Describe types of business activities. (EC:071/CS)• Explain the concept of production. (OP:017/CS)• Explain marketing and its importance in a global economy. (MK:001/CS)• Explain the concept of management. (SM:001/CS)

DECAIf DECA is already established in your school, invite one or more student DECA offi cers and members to speak to your class. If you

are starting a new chapter, invite a student regional, district, or state DECA offi cer. Ask these DECA members to describe their activities in DECA and the value of DECA membership to them. Ask your students to prepare questions ahead of time. Allow time for your students to ask questions.

Key Activity: Exchange Game (Part 1 Activity)The Part 1 Activity should be done after the students have gotten to know each other, such as after participating in some Getting to Know

You activities. The Exchange Game involves students in exchanging small goods with each other. The purpose of the activity is for students to experience the exchange process and to experience the value they place on items they trade.

The Exchange Game activity requires some preparation on the teacher’s part, but is well worth the effort. Doing this activity with students can set the stage for a fun and successful class. It encourages student participation and self-confi dence. It creates a common experience and foundation on which to build additional knowledge and understanding. Detailed guidelines for preparation and class management and a reproducible with student instructions are in the Teacher’s Resources.

31B

TM


2 BusinessBusiness BasicsBasics

After studying this chapter, you will be able to

■ identify economic needs and wants.■ describe the three uses of money.■ explain how business satisfi es economic

needs.■ describe the three forms of business

ownership.■ describe the difference between a for-

profi t corporation and a nonprofi t corporation.

■ list the four functions of business and give an example of each.

■ explain the role of marketing in business.

Marketing Termsneedwanteconomic needs and wantseconomic goods and servicesexchangemoneyvaluetime value of moneybusinessprofitsole proprietorshippartnershipcorporationnonprofit corporationproductionfinancemanagement

In order to have a good understanding of marketing, you need to understand some basic concepts about business, 2-1. This chapter will look at business in the broad sense to see how marketing fi ts into the total picture. This discussion will be like a photograph taken from an airplane, which shows how all the buildings, roads, rivers, and fi elds connect. The following chapters will then focus specifi cally on the topic of marketing. This chapter presents concepts such as economic needs and wants, the exchange, money, types of business ownership, and the four basic functions of business.

Have students look at the list of marketing terms. Have students organize the terms into groups of terms that go together. There should be at least two terms in a group. There should be at least four groups. They do not have to use all the terms. For each group, have students write a sentence that explains why these terms go together.

• WB: Chapter 2 Terms, Activity A. Use this activity to preview or review terms.

• For more vocabulary activities, see Activity Buffet—Vocabulary in the MEH.

• Have students read the objectives and predict what they will learn for each one. Then ask them to list the vocabulary terms that most likely go with each objective.

• For more prereading and reading activities, see Activity Buffet—Reading in the MEH.

Have students make two columns on a sheet of paper. In the fi rst column, have students list as many businesses as they can in fi ve minutes. At the end of fi ve minutes, go around the room and have each student read a business name from his or her sheet. All students who have this business listed should put a check mark next to it. Continue around the room until no one has a different business. Give a prize to the student with the most businesses that no one else listed. After students have studied the section on ownership types, have them fi ll in the type of ownership in the second column.

Vocabulary Builder

Resources

Prereading Activities

Introductory Activity


Could one person’s economic needs be another person’s economic wants? (Yes, they depend on the individual and his or her personality and economic situation.)

Do people in other countries have economic needs and wants different from those in the United States? (In some countries, the people are very poor, so their wants and needs tend to be for the necessities of life—food, shelter, clothing, and medical care.)

Think of your place of employment or your favorite store. List three products that meet consumer economic needs and wants. List three economic goods and services that the business might buy. (Student response. Grocery store—eggs, bread, fruit; plastic bags, shopping carts, groceries.)

Ask the history/social studies department to recommend two periods of history that offer an interesting comparison of consumer needs and wants. Have students examine which products were produced and purchased during those two eras in history.

For students with learning disabilities, stop periodically during your instruction to reinforce what was just covered, then ask an easy question about the content to check comprehension.

Critical Thinking

Part 1 Marketing Dynamics32

Economic Needs and Wants

What do you need to be able to live? Could you physically survive without your cell phone? Could you survive without food to eat? A need is something that is necessary for survival. You need air, water, food, clothing, and shelter. In our current society, needs include things you need to function in society. For example, you need schoolbooks, school clothes, and transportation to and from school.

If a genie granted you a wish, what would you want? You might want a new car, a new outfi t, or a trip to your favorite vacation spot. A want is something you desire but could function without, 2-2.

Everyone has needs and wants. Some needs and wants cannot be satisfi ed by buying something. For example, you cannot buy friendship. Needs and wants that you can satisfy by buying something are called economic needs and wants. Often, the term is shortened to economic needs, and you assume that the term includes economic wants. The products that you buy to satisfy economic needs are called economic goods and services.

Businesses have economic needs as well, 2-3. A business may need a new computer, an accountant to handle the fi nances, or a new building.

2-1

In order to understand marketing, you need to understand business.

2-2

What do you really need? What do you just want?

Global Thinking

WorkplaceConnection

History/Social Studies

Meeting Special Needs


Chapter 2 Business Basics 33

Make a list of your needs. Circle the economic needs. Then make a list of your wants. Circle the economic wants.

✓✓ Reality CheckReality Check

The ExchangeSuppose you decide to go to a concert.

On your way to buy tickets, you are thirsty, so you buy a soft drink. You put two dollars into a vending machine, and get a drink and some change. As you walk through the mall, you meet a friend who is collecting money for an animal shelter. You give her the change. When you get to the ticket booth, you give the cashier $35 for the concert ticket.

You did what all of us do: trade money for things you need and want. You gave cash to someone, and in exchange, received something you wanted. To exchange is to trade something of value for something you want. You exchanged money (something of

value) for a soft drink (a good) and a concert ticket (entertainment, which is a service). You also gave money to support the animal shelter (an idea or cause). Exchange is the basis of all business. Without exchanges, business and marketing would not exist, 2-4.

Describe your most recent exchange. Include the product you acquired and what you exchanged for it.


2-3

Businesses also have economic wants and needs. They might need more workers, more equipment, or more offi ce space.

2-4

Exchange means to trade something of value for something you want. Exchange is the basis of all business.

(Student response. Bus ride—token; can of Coke—$0.75; candy bar—can of Coke.)

Explain why exchanges are the basis of all business. (Exchanges developed because one person could not obtain everything he or she needed. So people traded what they had too much of, in order to get what they needed but did not have. In this way, trade developed. Trade is another term for exchange. The term “business” developed to cover activities involved in exchanges.)

Reality Check Answer

Critical Thinking

Student response. Circled economic needs may include food items such as milk, shelter, and basic clothing. Circled economic wants may include leisure or luxury items such as a leather jacket, an audio player, or a car.

Have students use their list from the Reality Check or make a new list of their needs. Now have them imagine that they are on a deserted island. Which items would they need now to survive? (Food, shelter, water)


Activity



MoneyIn ancient times, people would exchange

goods for other goods. They would also work in exchange for food and other goods. This type of exchange is called barter. Barter can be very diffi cult, time-consuming, and unsuccessful. To solve the diffi culties with barter, people developed a solution: money. Money is a consistent item that people accept in exchange for goods or work. Early forms of money included beads, salt, tobacco, and gold. Today people use paper money, coins, checks, and debit cards.

Money makes it easier to exchange goods and services. Without money, modern business would not be possible. Money is used in three ways: (1) medium of exchange, (2) unit of value, and (3) store of wealth.

Medium of ExchangeImagine if there were no money, and you

were an apple picker. You get paid in apples. Whenever you want to buy something, you have to carry around a huge sack of apples. Suppose you try to barter your apples for a shirt, but the shirt-seller does not want apples. He wants coffee. You have to run around (with your big sack of apples) looking for someone who will take your apples in exchange for coffee. Now imagine the situation with money. You get paid in dollars. The dollars are small and light and fi t in your back pocket. The shirt seller can charge you $20. You can pay him with the dollars. Money is a convenient medium of exchange.

Unit of ValueMoney also makes it easier to express

the value of goods and services. Value is how much something is worth. In the barter situation, people have to determine the value of an item each time they exchange it for a new item. For example, how many apples is

a shirt worth? How many shirts is a pound of coffee worth? What if a pound of coffee is worth a shirt and a half? What good is half a shirt? Money enables you to express the value of products in a precise, mathematical form, 2-5.

The dollar is the unit of value in the United States. The dollar is used to express the value of goods, services, and ideas in the same way miles are used to express distance. How far away is that town? 50 miles. How much does that leather jacket cost? 300 dollars. The value of a product expressed in dollars is known as the price.

The word value also has another meaning. Value can refer to the worth of an item to an individual. Individuals do not value all items the same way. For example,

2-5

In the time of barter, people exchanged items such as salt, animals, or produce. Money is a more convenient medium of exchange.

Credit cards are not included in this list of forms of money. Credit cards are not money; they are used to defer payment to the future. Credit is discussed on pages 607–608.

Have students place whatever money they have with them on their desks. Have students describe the money. Elicit the fact that money is just colored paper and that the metal in coins has relatively little value. Ask, “What makes money valuable?” (Everyone accepts the value of money. The government establishes the value of money.)

In the Exchange Game, did someone really want something of yours that you did not think was valuable? Describe an exchange that shows that people place different values on the same item. (Student response. Someone gave me a T-shirt for a pen.)

WB: Making Change, Activity C (math). This worksheet challenges students to fi gure out how much change to return to customers who give them a specifi c amount of cash.

FYI

Activity

Part 1 Activity Revisited

Assume you start saving $500 a year at age 18. Your friend Melissa, age 35, realizes that she has no savings. To catch up, she starts to save $1000 a month. Which of you will have put more money in savings? (Melissa.) Who will have more money at age 65? (You!) In fact, time will have given you over $300,000 more than Melissa. Why? (Because time really is money.) When you put money into an account it starts earning interest—profi t you make by investing money at the bank. This interest can really make a difference. Use the “Rule of 72” to calculate how long it takes to double your savings. Divide 72 by the interest rate. For example, if you save $500 at 10 percent interest (72 ÷ 10 = 7.2) it would double in a little over seven years. If you invested $500 at 5 percent interest (72 ÷ 5=14.4) it would double in a little over 14 years.

Math

Resource



an individual may think that a leather jacket is not worth $300. Another individual might think the jacket is worth $300. The marketer of the jacket thinks it is worth $300 and that many customers will pay that price. Price is the way marketers establish the value of the their products.

Time Value of MoneyThe notion that a sum of money has

greater potential worth in the future than it does today is called the time value of money. Understanding the time value of money can help you make important money-management decisions related to the tradeoffs between spending and saving. For example, suppose you think the previously mentioned leather jacket is too costly at $300 even though you would like to own it. You decide to put your $300 into a savings account at the bank because you think it will be worth more in the future. After a year, your savings increases to $315. During the same time, however, marketers raise the cost of the leather jacket to $325 to cover increasing manufacturing costs. You still want the leather jacket, but now it costs more than it did a year ago. Did you make the right money-management decision based on the time value of money and the value you placed on the leather jacket?

Store of WealthImagine a storeowner in the time of

barter. She receives payment for goods in the form of apples, shirts, salt, and cows. How will she store all these big, bulky, and (in the case of the cows) living items? What if she needs to pay for something and it costs half a cow? What if the apples rot or the cows die before she can exchange them for something she needs? Money enables you to keep and store wealth in a compact, easy, and long-lasting form. Money is considered a store of wealth because it enables you to store (in other words save) money until you need it.

Describe how you use money as a store of wealth.


What Is Business?Business is the general term for all the

activities involved in the development and exchange of products. The general term business includes industry, construction, mining, and farming. Business provides most of the goods and services that you use every day. Business also supplies most of the wages (money) that people use to buy those goods and services. Business is the engine that powers economies around the world. Figure 2-6 shows how money fl ows through an economy.

Payment of salary,wages, and profits

Payment for goodsand services

Money

Money

BusinessWorkers

2-6

Business powers the economy. Money fl ows from businesses to workers, then from the workers back to the businesses.

(Student response. Save money in a drawer to buy something more expensive.)

Do products have different values in different countries? In other words, might a product that is of high value in one country be of low value in another? (Answers may vary. In the United States, we do not value food very much because we have so much. In countries that have less food, food is very valuable.)

Have students write as many different sentences as they can for each of the terms used to refer to a business. Give students only 3 or 5 minutes. Give a prize to the student who generates the most sentences.

Vocabulary Builder

Review the meaning of the terms need, want, economic needs and wants, economic goods and services, exchange, money, and value. Answer questions 1–4 under Review Concepts and questions 1–4 under Think Critically at the end of the chapter.

Review It Now


Global Thinking



The term business is also used to refer to a specifi c person or group of people who are involved in the development and exchange of products. A business can be large or small. A lemonade stand run by children is a business. General Mills, with thousands of employees and hundreds of buildings, is also a business. Several other terms are used to refer to a business: fi rm, company, organization, corporation, and enterprise.

Make a list of all the businesses that touch your life in just one day. Keep in mind that if you use a product in an activity, such as a toothbrush for brushing your teeth, then both the toothbrush manufacturer and the store where you bought the toothbrush touch that activity.


Making a Profi tThe main goal of most businesses is to

make a profi t. Profit is the money that a business has left after all the expenses and costs of running the business are paid.

How does a business make a profi t? A business makes a profi t by marketing products that customers want and are able and willing to buy. Customers want and are willing to buy products that meet their needs and wants. Therefore, most businesses make a profi t by satisfying the needs and wants of their customers.

Businesses fi nd out what customers need, want, and will pay for. Businesses then develop, produce, distribute, advertise, and sell their products. For example, Nike knows that its customers want quality athletic shoes and the image of athletic ability. Based on this knowledge, Nike develops, produces, distributes, advertises, and sells athletic shoes.

Think of an economic need or want that you have. Name at least one business that has a product to satisfy that need.


Forms of Business Ownership

There are millions of businesses in the United States. However, there are only three forms of business ownership: sole proprietorship, partnership, and corporation. A brief overview of the three types follows, 2-7. You will learn more about them in Chapter 52.

A sole proprietorship is a business owned by one person. That person has all the responsibility and gets all the profi ts from the business. Many small businesses are sole proprietorships. Examples include car washes, restaurants, and beauty salons.

A partnership is a business owned by a small number of people, usually two or three. Partners share the responsibility and the profi ts of the business. Law fi rms are often partnerships.

Are any of the businesses in your neighborhood sole proprietorships or partnerships? List at least two of each type.


What Is a Corporation?In the eyes of the law, the people who

own a sole proprietorship or a partnership are the business. However, in the eyes of the law, a corporation is an artifi cial person that exists separately from the people who own it. The legal term for artifi cial person is legal entity. A corporation is a legal

(Student response. You might assign this as homework. Encourage students to name as many businesses as possible.

Have students stand up. Have each student name his or her need or want, product, and the business that produces it, then sit down.

Organize the class into three groups. Assign each group one of the forms of business ownership. Have each group present its form to the class. Have each group also develop a quiz to give after its presentation.

Are forms of ownership the same in all countries? Record your fi ndings in your notebook.

TR: The World of Corporations, Master 2-1 (project). Students choose a corporation and research its background, fi nances, and business.


Cooperative Learning

InternationalBusiness Project

Resource

Answers depend on the businesses in your area. If questions arise as to the form of ownership of a business, have the students research it.

Review the meaning of the terms business, profi t, sole proprietorship, partnership, corporation, and nonprofi t corporation. Answer questions 5–8 under Review Concepts and questions 5–7 under Think Critically at the end of the chapter.


Review It Now




entity established for the purpose of doing business. As a legal entity, a corporation can buy property, run a business, manufacture products, earn money, lose money, sue, and be sued. As a legal entity, the corporation is separate from the people who own it. The owners are not responsible for the actions of the corporation. The corporation is responsible for its actions.

Who owns the corporation? People called shareholders or stockholders own the corporation. Stock is the right of partial ownership in the corporation. The corporation sells stock. The people who buy the stock become the stockholders and owners of the corporation. Many large businesses are corporations. Examples include Ford, Microsoft, and Verizon.

Name a corporation in which you own stock or would like to own stock.


What Is a Nonprofi t Corporation?

There are two categories of corporation: for-profi t and nonprofi t. The goal of a for-profi t corporation is to make a profi t for the owners. When the term corporation is used on its own, it refers to a for-profi t corporation.

A nonprofit corporation is a legal entity, like a for-profi t corporation. However, instead of profi t, its main goal is to achieve something to benefi t society. Here are some nonprofi t goals: to raise money for medical research, to protect the environment, and to provide outdoor camping experiences for children. Nonprofi t corporations are also called nonprofi ts or not-for-profi t organizations.

The goals of a nonprofi t corporation usually fall into one of fi ve categories: charity, education, public benefi t, mutual benefi t, and religion. For example, the Red Cross is a nonprofi t corporation. The goal of the Red Cross is to help people keep

Forms of Business Ownership

Sole Proprietorship Partnership Corporation

2-7

There are only three forms of business ownership: sole proprietorship, partnership, and corporation.

(Student response. Coca-Cola, Nike, McDonald’s, Pepsi.)

Most nonprofi ts are established to support a good cause. What kinds of ethical problems might arise for a nonprofi t? (Answers may vary. Does the money actually go to help the cause, or are the employees taking most of the money in salary and benefi ts?)


Ethics

Is DECA a corporation? (Yes, a nonprofi t.) Find out what kind of organization DECA is. (501c3, a type of nonprofi t, and is nonpartisan and nonsectarian.) What benefi ts does DECA get from its form of business ownership? (As a tax-exempt organization, DECA does not have to pay taxes on the items it buys or corporate or federal income taxes. In this way, the money that DECA gets goes farther to support DECA’s goals: developing future leaders in marketing, management, and entrepreneurship.)

CH_02.indd Sec1:37CH_02.indd Sec1:37 7/2/2009 3:18:28 PM7/2/2009 3:18:28 PM


An important task of the fi nance function is planning. The people who work in fi nance are often responsible for developing budgets. A budget is a spending plan. A budget helps the business make sure it has enough money to cover expenses. It also helps make sure that the business is handling its money wisely and making a profi t. If a business decides to take a loan, the fi nancing function will plan for the repayment of the loan.

Accounting is one part of fi nance. Accounting handles paying bills, receiving payments, and keeping track of all money that enters or leaves the business.

MarketingMarketing is the part of the business

that focuses on the customer. Marketers are responsible for helping the entire business focus on the needs and wants of customers. The marketing function helps a business follow the marketing concept. You will learn about the marketing concept in Chapter 3.

Marketing includes many functions. Some of them are selling, promotion, and pricing. The marketing function includes learning about customers so that the business can develop products that customers want and are able and willing to buy. Marketing then promotes and sells the products to customers. Marketing also follows up to fi nd out how satisfi ed customers are with their products. You will learn more about the functions of marketing in Chapter 3.

ManagementManagement includes all the activities

required to plan, coordinate, and monitor a business. Imagine the school band without a bandleader. What happens to the music? It sounds terrible. Why? Even though each of the musicians is talented, none of them can hear the sound of the whole band. The role of the bandleader is to constantly assess the sound of the whole band. The bandleader

safe every day and to provide help during emergencies.

A nonprofi t corporation can make a profi t. However, any profi t it makes goes back to support the nonprofi t goal. There are special laws for nonprofi t corporations. For example, nonprofi t corporations are excused from paying many kinds of taxes.

The Functions of Business

Function is a general word for a category of activities. Businesses carry out numerous activities. These activities are often grouped into four functions: (1) production, (2) fi nance, (3) marketing, and (4) management, 2-8.

ProductionHave you ever seen production at a large

manufacturing plant? When you think of production, you often think of huge factories and assembly lines of people putting together cars, washing machines, and TVs. Production is any activity related to making a product (good, service, or idea). Production includes farming, mining, construction, and manufacturing. Production also includes the work done at a TV station in preparing a program for broadcast. For services, production is often the service itself, for example, cutting and styling hair.

FinanceBusinesses handle a large amount of

money. Businesses handle the money that customers pay them. Businesses pay for raw materials and business services. Businesses pay their employees and taxes. Sometimes businesses borrow money from a bank. The finance function of business includes all activities involving money.

Have you or someone you know worked in the production area of a business? Describe what someone in production does. (Student response. Attach parts together, monitor an assembly line, build or remodel houses, assemble and bake pizzas.)

How has technology affected production? (Answers may vary. Increase speed of production, reduce the physical diffi culty of jobs—machines do the heavy lifting, develop hardier crops that grow better.)

Talk with the manager at your workstation or the owner or manager of a local business or department in a store. Who handles the fi nancial portion of the business? In general, what do these people do?

Critical Thinking

Critical Thinking

WorkplaceConnection

WB: Business Functions at “Lassie and Morris,” Activity B. Students read about a business that two friends plan to start, and label each activity as one of the business functions.

TR: The Four Functions of Business, Master 2-2 (transparency). Use this transparency to present or review the four functions of business and record examples of each.

Resources



FinanceActivities related to money

ManagementPlanning, coordinating, and monitoring

MarketingActivities focusing on the customer

ProductionMaking goods, services, ideas

Four Functions of Business

2-8

The four functions of business work together to make a successful, profi table business.

then instructs each member how to change to make the sound better. Management in a company plays a similar role. The managers look at the big picture and lead workers to make changes to make the business

better. Managers plan, implement plans, and control. (In business, control means to monitor and evaluate results.) Managers also hire, train, and supervise employees.

EntrepreneurshipImagine that you wanted to open a store. Where could you get the money to buy the things you need to open your store? (Student response. Bank loan, money from friends and parents willing to invest in my business, government small business loan programs.)

Have you or someone you know worked in the marketing area of a business? Describe what that person does on the job.

Review the meaning of the terms production, fi nancing, and management. Answer questions 9–10 under Review Concepts and questions 8–10 under Think Critically at the end of the chapter.

Critical Thinking

Review It Now

Obtain a list of organizations in your community that are nonprofi t corporations. Assign each student or a group of students to research each organization. Students might interview a representative of the organization. Have them prepare questions ahead of time, such as, “What is the purpose of this organization? How are you involved in our community? What does your organization do at the state, national, and international levels?” In addition, students might attend a meeting or help the organization in some way. Students should prepare a written report about the organization and include a proposal of how they could help the organization.

Community Interaction


40

Chapter 2 ReviewChapter 2 Review

Remember This

■ Exchange is the basis of all business and marketing.

■ Money is used as (1) a medium of exchange, (2) a unit of value, and (3) a store of wealth.

■ Business satisfi es your economic needs by producing and marketing products that meet your needs.

■ The three forms of business ownership are sole proprietorship, partnership, and corporation.

■ The goal of a nonprofi t corporation is to benefi t society.

■ The four functions of business are (1) production, (2) fi nance, (3) marketing, and (4) management.

■ The role of marketing is to help the business focus on the customer.

Review Concepts

1. What makes a need an economic need? 2. Give an example of an exchange. 3. Why is money easier to use than barter? 4. Give an example of each of the three uses

of money. 5. Give two meanings for the term business. 6. What is the main goal of most

businesses? 7. Explain the differences among a sole

proprietorship, a partnership, and a corporation.

8. True or False: A nonprofi t cannot make a profi t. Explain your answer.

9. Describe each of the four functions of business.

10. Which business function includes accounting?

Think Critically

1. Write down one economic need and one economic want that you have. Explain why one is a need and the other is a want.

2. Describe a situation in which barter would be useful.

3. Name an item that you own that you would consider selling. How would you value this item? Describe its value if you were bartering for it. Then describe its value in terms of money.

4. Give examples of how you use money as a medium of exchange, a unit of value, and a store of wealth.

5. Draw conclusions about how the time value of money may impact how a consumer uses money as a medium of exchange.

6. Name three businesses that meet your economic needs or wants. For each business, name the need or want that it satisfi es. Then describe how the business satisfi es that need or want.

7. Name a nonprofi t corporation. What is its goal?

8. Describe a business you would like to own. Which type of ownership would you choose? Why? How would you carry out the four functions of business?

1. If you can buy something to satisfy it, it is an economic need.2. Student response. Paying money and getting a hamburger in exchange.3. Money provides a precise way to value items and is easy to carry around or store.4. Student response. Medium of exchange—exchanging money for a haircut; Unit of value—setting a price for items in a bake sale; Store of wealth—putting money in a bank.5. (1) Business is the general term for all the activities involved in the development and exchange of products. (2) Business also refers to the person or group who are involved in the development or exchange of products.6. Profi t7. A sole proprietorship is owned by one person. A partnership is owned by two or more people who share responsibility and profi ts. A corporation is a legal entity established for the purpose of doing business.8. False. A nonprofi t can make a profi t, but the profi t goes back to support the nonprofi t goal.

Review Concepts Answers

9. Production—making the product; Financing—handling the money; Marketing—focusing on the customer, promoting and selling products; Management—planning, coordinating, and monitoring the business.10. Financing


MEH: Activity Buffet—Content Review, Games, and Vocabulary. Use activities from these buffet categories to review chapter content and vocabulary.

Select from various assessment options: Chapter 2 Test, Reproducible Test Master in the TR; Activity Buffet—Assessment in the MEH; and the ExamView® Assessment Suite CD.

Resources Review

Resources Assessment

Imagine that you are in charge of establishing a new nonprofi t corporation. Describe the nonprofi t goal that you would choose. Why did you choose this goal? How would your new corporation meet this goal?

Journal Writing

41

9. There are three types of products: goods, services, and ideas. Give an example of a production activity for each.

10. A business needs a loan to buy some equipment. Which business function would handle this activity?

11. A business wants to know if its customers are happy with its products. Which business function would gather this information?

Connect to Business

1. Contact a manager at your workstation or a local business. Find out how the four business functions are handled. Is there a separate department for each function? Get permission to interview one person in each area. Find out the person’s job title and what he or she does during a typical day. Assemble the information into a report, presentation, or poster on the four business functions.

2. Make a chart showing the three types of business ownership. Under each type, list at least three businesses in your community.

Explore Careers

1. Look in the “Help Wanted” section of your local newspaper. Find at least two ads for each of the four business functions. Based on these ads, describe the qualifi cations needed for workers in each of the four functions.

2. Look in the “Businesses for Sale” or “Business Opportunities” section of your local newspaper. Choose a business that

appeals to you. Describe the business and why it appeals to you. What type of business ownership would it have?

Connect to the Internet

1. Find a Web site that helps people barter. Describe the Web site and how it works. Would you use that Web site to buy something? Explain why or why not.

2. Choose a foreign country. Use a search engine to learn about the money (currency) used in that country. Describe that country’s currency and how it compares with U.S. currency.

3. Use Internet or print resources to investigate more about the time value of money. How does the time value of money impact consumers? How might the time value of money impact marketers? Write a brief summary of your fi ndings to share with the class.


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