Satisfying Needs and Wants                             

• Needs and Wants – Hardly a day goes by that you don’t see a product or service that you would like to have. You see them in the shopping mall, the grocery store, or while surfing the Web. Advertisements on television, radio, or the Internet attempt to convince you that you need whatever is new.  How do you decide what to buy or even if you need to buy at all?
• Needs Are Essential – You want many things, but do you really need them?  Determining what is a need and what is a want is an important part of making good decisions.
  Things that are required in order to live are known as needs. Everyone needs food, water, clean air, clothing, and shelter. Other needs in today’s economy are a good education, employment, and safety. Most people need transportation to get to and from school and work. People who have health problems need medical care and medicines.
• Wants Add to the Quality of Life – Things that add comfort and pleasure to your life are wants. You may believe you can’t live without the latest fashion, CD, or movie, but you can and many people do. A small apartment meets the need for shelter, but many people want a large house or a vacation home at the beach. It is possible to use public transportation to get around in the city, but driving a new car with luxury options adds convenience and an image of success.

It is not always easy to determine products and services that are needs and those that are wants. The country in which you live, the economic status and lifestyle of your family, and the work you do to help determine whether something is really necessary or not. Most products and services you purchase do more than meet your needs. They make your life easier and more comfortable.

• Needs and Wants Are Unlimited – Your needs and wants never end. You are limited only by your imagination and by what businesses make available for you. A new style convinces you your current jacket is no longer adequate. One purchase leads to another. You purchase the latest model video game player and now you need a new set of games. A new pair of shoes may require matching accessories.
  Your wants can go on and on. They change from day to day. Something you thought you couldn’t live without two days ago now doesn’t seem as important and is replaced by a new want. Everyone has unlimited wants. Those wants are not the same for each person.
• Goods and Services – You satisfy your needs and wants by purchasing and consuming goods and services. Goods are things that you can see and touch. They are the products you can purchase to meet your wants and needs. Services are activities that are consumed at the same time they are produced. Services are intangible, meaning they have no physical characteristics. You use services as well as goods to satisfy your wants and needs, but they must be provided to you at the time you want to consume them.
• Goods and Services for Businesses and Consumers – Goods and services are purchased by businesses as well as consumers. Some goods and services are unique for business or consumer use. Others are similar but meet different needs.
  A business needs steel, plastic, gasoline, and computers in order t operate. It must have a constant supply of electricity, security for buildings and equipment, and accountants who maintain records and file tax returns.
  Consumers buy watches, televisions, cell phones, and books. They eat at restaurants, go on vacations, and take their car to the auto dealer for service and repairs. Businesses supply the goods and services that meet business and consumer needs and wants.
• The U.S. Economy – The United States is the biggest producer of goods and services in the world. Americans consume more than any other country. In fact America has twice as many shopping malls as it does high schools. America’s lead in consuming goods and services increased throughout the 20^th century. The move to an industrialized economy resulted in higher incomes which could be spent on consumer products. The consumer economy provides many advantages, but also results in problems. American produce more garbage per person per year than the residents of any other country.
  American often incur debt through obtaining loans and using credit cards. Not all consumption is excessive and not all Americans purchase beyond their means to pay. Many demonstrate financial responsibility through saving and investing their money rather than spending. This enables them to accumulate enough money to finance a car, pay for additional education, or save for retirement.
  Some believe the high level of U.S. consumer demand stems from the sheer quantity of goods and services available and the amount of money spent to advertise their offerings. Spending opportunities occur daily and require careful decisions to make sure important needs and wants are satisfied in the future as well as today.
• Economic Resources – How do you get the goods and services you need and want? Few are free. Individuals no longer create most of the products and services they consume as they did many years ago. Economic resources are needed. Economic resources are the means through which goods and services are produced. Economic resources are called the factors of production. The three kinds of economic resources are natural resources, human resources, and capital resources. Businesses and individuals use resources to produce goods and services.
• Natural Resources – Raw materials supplied by nature are natural resources. The earth contains oil, minerals, and the nutrients needed to grow crops and timber and to feed animals. Rivers, lakes, and oceans are sources for both food and water. The air you breathe comes from the atmosphere that surrounds you. All products you consume begin with one or more natural resources.
  Consider something as simple as a can of chicken soup. What natural resources are were used in its production? The chickens, vegetables, and spices are the result of crops and animals raised on rich farmland. The water is extracted from wells or reservoirs that were filled by rain. Aluminum was extracted from the ground and used to produce the container.
  The earth contains a variety of minerals, plants, fish, and animals. However, the supply of many natural resources is limited. Increased consumption as well as damage to the environment threatens the natural resources of many regions of the world. Conservation practices as well as the production of more efficient products help to preserve resources.
• Human Resources – The people who produce goods and services are known as human resources. In the example of the chicken noodle soup, many people are needed to complete the work required to produce that product. Farmers raise the livestock and crops. Factory workers and managers use equipment designed by engineers and manufactured by the employees of other businesses to process the food. Truck drivers, salespeople, advertisers, and supermarket employees are also involved in producing the product and making it available to consumers for purchase.

One type of human resource is an entrepreneur. An entrepreneur is the risk taker who uses resources in an entirely new way to create a new product or service.

• Capital Resources – People must have access to tools and equipment in order to convert natural resources into products. The products and money used in the production of goods and services are capital resources. Capital resources include buildings, equipment, and supplies. They also include the money needed to build a factory, buy or lease vehicles, pay employees or purchase goods and services required to manufacture and distribute other goods and services.
  Some people invest money in businesses so the business will have the capital needed to operate. Those people expect they will make money from the profits earned by the business. Other people receive income by selling their knowledge and skills to businesses in the form of labor. Those with special skills or knowledge of important business processes often command higher incomes than those with knowledge and skills that are more common.
• Resources are Limited – All economic resources have a limited supply. Most resources can be used to produce several different products and services. If resources are used to produce one type of product, they will not be available for the production of something else.
  Individuals, businesses, and even countries compete for access to and ownership of economic resources. Those resources that are in very high demand or have a limited supply will command high prices. Because there is a limited amount of natural resources, there will also be a limit to the amount of goods and services that can be provided.

Assignment - Needs vs Wants

Define Chapter 1-1 Key Terms (page 6).

Read the Article "Needs Versus Wants in This Economy" (see link below). 
Using Word, write a two paragraph paper discussing the effects of the current U.S. economy on retail outlets in the country.