•What is Business?
•· Businesses
are influenced by such external factors as the economy, government, consumer
trends, and public pressure to act as good corporate citizens.
•· The
activities needed to run a business can be divided into five functional areas:
•1.
Management
involves
planning, organizing, staffing, directing, and controlling resources to achieve
organizational goals.
•2.
Operations
transforms
resources (labor, materials, money, and so on) into products.
•3.
Marketing
works
to identify and satisfy customers’ needs.
•4.
Finance
involves
planning for, obtaining, and managing company funds.
•5. Accounting entails measuring, summarizing, and
communicating financial and managerial information.
•What is Economics?
•Resources:
Inputs and Outputs
•Economics
is the study of the production, distribution, and consumption of goods and
services. Resources are the inputs used to produce outputs.
Resources may include any or all of the following:
•· Land
and other natural resources
•· Labor
(physical and mental)
•· Capital,
including buildings and equipment
•· Entrepreneurship
•The Circular Flow of Inputs and Outputs
•The Questions Economists Ask
•Economists
study the interactions between households and businesses and look at the ways
in which the factors of production are combined to produce the goods and
services that people need. Basically, economists try to answer three sets of
questions:
•1.
What
goods and services should be produced to meet consumers’ needs? In
what quantity? When should they be produced?
•2.
How
should goods and services be produced? Who should produce them, and what
resources, including technology, should be combined to produce them?
•3.
Who
should receive the goods and services produced? How should they be allocated among
consumers?
•Economic systems
•Generally
speaking, economic systems can be divided into two systems: planned
systems and
free
market systems.
•Economic systems (cont)
•Mixed Market Economy
qThe U.S. Economic System
•Adam Smith The Wealth of Nations,
published in 1776. According to Smith, competition alone would ensure that
consumers received the best products at the best prices.. Because the
“invisible hand” of competition will make the market work effectively, there
won’t be a need to regulate prices or wages.
•The U.S. Economic System
•laissez-faire—leaving things alone
•government intervention
•What are some examples?
•What about the Constitution?
•Perfect Competition and Supply and Demand
•Describe perfect competition, and explain
how supply and demand interact to set prices in a free market system.
Economists have identified four types of competition—perfect competition,
monopolistic competition, oligopoly, and monopoly.
•The Demand Curve
•The Supply Curve
•Equilibrium Price
•Resources
•Adam Smith
•Milton Friedman
