Page 69 - Business Principles and Management

Unit 1

machinery are produced for making trucks, it is then possible to increase the pro-
duction of trucks.
However, using steel, labor, and management to produce tools and machinery
(capital goods) means that these same resources cannot also be used for automo-
biles (consumer goods). The immediate result is that consumers have fewer auto-
mobiles to buy. But, because the tools and machinery were made, consumers will
have more automobiles to buy in the future. China and other developing countries
are examples of nations that use a large portion of their productive resources in
capital formation rather than in the production of consumer goods and services.
Developing nations must take this first step before they can satisfy consumers with
consumer products.

CHECKPOINT
Create a list of capital goods and a list of consumer goods.

3.1 Assessment

UNDERSTAND MANAGEMENT CONCEPTS
Circle the best answer for each of the following questions.
1. The body of knowledge that relates to producing and using goods
and services that satisfy human wants is called
a. needs analysis
b. marketing
c. economics
d. none of the above
2. The ability of a good or a service to satisfy a want is called
a. economizing wants
b. utility
c. production
d. benefiting

THINK CRITICALLY
Answer the following questions as completely as possible.
3. What are the four most common types of utility?
4. What is the difference between capital goods
and consumer goods?

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