Supply, Demand, and Entrepreneurship

• Chapter 1 discusses entrepreneurship and its role in the economy.
• It also covers the entrepreneurial process and related concepts

Entrepreneurship and the Economy

• Entrepreneurship acts as the primary catalyst for economic growth.
• Being a successful entrepreneur requires understanding how the economy works.
• An entrepreneur is an individual who undertakes the creation, organization, and ownership of a novel business.
• Launching and managing a business venture calls for a diverse set of skills.
• An entrepreneurial endeavor involves recognizing opportunities, testing the viability, and gathering resources.
• Economics is understanding how entrepreneurs and customers interact when allocating scarce resources to fulfill unlimited wants.
• An economic system includes a set of laws, institutions, and activities that guide economic decision making.
• Most democratic countries operate under a free enterprise system.
• A free enterprise system provides people with rights to make economic choices, own private property, and start or compete with other businesses.
• Profit, defined as the surplus after deducting business expenses, is a key motivator in free enterprise.
• Market structure is affected by competition among businesses in the same industry
• Perfect competition involves numerous buyers and sellers, where no single entity controls prices.
• The government may grant a temporary monopoly to an inventor.
• A monopoly is a market structure in which one seller controls a particular commodity.
• Some forms of oligopoly, a market structure with few competing firms, are illegal under antitrust laws.
• A market structure in which there are just a few competing firms is known as an oligopoly.
• 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?
• Goods and services represent the products of our economic system.
• Services are intangible products satisfying consumer needs and wants.
• Needs are basic survival requirements, like having food, water, shelter, clothing etc...
• Entrepreneurs respond to needs and wants with goods and services.
• Factors of production, which include land, labor, entrepreneurship, and capital, are the resources used to produce goods and services that people want.
• Scarcity is the difference between what is desired and what is available (limited resources).
• Demand is the quantity of goods or services consumers are willing and able to purchase at various prices.
• Elastic demand is the the degree to which demand for a product is affected by its price
• Inelastic demand is the degree to which change in price has little to no effect on demand for products.
• Diminishing marginal utility is the effect or law that establishes that price alone does not determine demand, and that other factors, such as income, taste, and the amount of product already owned, play a role as well.
• Supply is the amount of goods or services producers are willing to provide.
• Prices increase is something is in heavy demand, but in short supply
• Prices decrease if something is in heavy supply, but in short demand
• Equilibrium is the point at which consumers buy all of a product at a price where there is neither surplus nor shortage.
• Gross Domestic Product (GDP) is the total market value of goods and services produced by workers and capital within a nation during a given period.
• The Gross Domestic Product is an example of an economic indicator.
• Economic indicators and business cycles are tracked by the federal government which is used by entrepreneurs to understand the economy and predict possible changes.
• A business cycle is the general pattern of expansion and contraction that the economy goes through.
• There are four stages of the business cycle:
  • growth
  • recession
  • depression
  • recovery
• Entrepreneurs contribute by turning demand into supply, providing venture capital and jobs, creating more wants, and promoting changes in society.
• The difference between small businesses and entrepreneurial ventures is that small businesses create jobs for themselves, while entrepreneurial ventures innovate, grow, and create value.
• Entrepreneurs start by responding to society's wants and end up changing society, creating more wants to be satisfied.
• Entrepreneurs are catalysts for economic progress.
• Economic systems include traditional, pure market, command, and mixed economies.
• Because resources are limited, consumers must often give up something when making choices.
• Entrepreneurs provide jobs, are a primary source of venture capital, offer financial security, and drive societal change by meeting needs and wants.

The Entrepreneurial Process

• The Entrepreneurial start-up process includes:
  • the entrepreneur
  • the environment
  • the opportunity
  • start-up resources
  • the new venture organization
• Enterprise zones, opportunity, and start-up resources make up key components of entrepreneurship.
• Discontinuance, new venture organizations,and busines failure also make up the entrepreneurship process.
• Entrepreneurship has been a feature of American culture since the American Revolution.
• Five components of the entrepreneurial start-up process work together to create a new business.
• The entrepreneur is the primary driver in the start-up process, recognizing opportunities and gathering resources.
• New businesses seek enterprise zones, which provide incentives like tax benefits and grants that can help start-ups.
• An opportunity is an idea with commercial value.
• When entrepreneurs start thinking about starting a new business, creative talent helps puts together the resources necessary to start-ups.
• Start-up resources are the capital, skilled labor, management expertise, legal and financial advice, facilities, equipment, and customers needed to start a business.
• The fifth component of the start-up process is the new venture organization's execution.
• A new venture organization is the infrastructure or foundation that supports all the products, processes, and services of a new business
• A business failure is the point at which a company files Chapter 7 bankruptcy.
• Discontinuance is when a business disappears from tax rolls, either due to changing its name or the owner's decision to start a new venture.
• To succeed, entrepreneurs should recognize opportunities, test them, assemble an expert team, and plan and manage effectively.
• Since the American Revolution, entrepreneurship has been a feature of American culture and was known for enterprising colonists finding innovative ways to introduce new products and services, growing in popularity in the 1980s.
• The entrepreneurial start-up process includes the entrepreneur, environment, opportunity, start-up resources, and new venture organization.
• Entrepreneurs can secure opportunities to establish new businesses with effective planning and management.
• To do this they must recognize the opportunity, test that opportunity in the marketplace, and assemble a team with the necessary expertise to put forth a successful business concept.

Explore the relationship between supply and demand and its effect on entrepreneurship. Understand how entrepreneurs make business decisions based on these economic principles. Learn how they address consumer needs and wants, contributing to solving scarcity.