Académique Documents
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Business 3e
Pride, Hughes, &
Kapoor
Exploring the World of
Business and Economics
Chapter
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 2
Learning Objectives
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 3
Free Enterprise
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 4
Yearly Income
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 5
Seven Ways to Use this Text and Its Resources
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 6
Business
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 7
Combining Resources
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 8
Business Profit
Sales Revenue
- Business Expenses
Profit (Loss)*
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 9
Ultimate Objective of Every Firm
“
“ …to satisfy the needs of its customers.
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 10
Stakeholders
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 11
Economics
“
“ …the study of how wealth* is
created and distributed**.
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 12
Economy
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 13
Economic Perspectives
Microeconomics
The study of decisions made by:
• Individuals
• Businesses
Macroeconomics
The study of:
• National economy
• Global economy
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 14
Types of Economic Systems
Capitalism
• Free enterprise
• Adam Smith (Wealth of Nations)
• The invisible hand
• Laissez-faire capitalism
Command
• Socialism
• Communism
– Karl Marx
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 15
Adam Smith
Wealth of Nations (1776)
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 16
Basic Assumptions for Adam Smith’s
Laissez-Faire Capitalism
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 17
“Invisible Hand”
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 18
Capitalism
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 19
U.S. = Mixed Economy
“
“ …an economy that exhibits elements
of both capitalism and socialism.
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 20
Circular Flow in Mixed Economy
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 21
Command Economy
“
…an economic system in which the
government decides what goods and services
will be produced, how they will be produced,
for whom available goods and services will
be produced, and who owns and controls the
“
major factors of production.
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 22
Command Economies
Socialism
Communism
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 23
Socialism
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 24
Communism
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 25
Measuring Economic Performance
Economic Indicators
• Gross domestic product (GDP)
• Inflation
• Deflation
• Unemployment rate
• Consumer price index (CPI)
• Producer price index (PPI)
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 26
GDP in Current Dollars and in
Inflation-Adjusted Dollars
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 27
Common Measures Used to Evaluate
a Nation’s Economic Health
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 28
Common Measures Used to Evaluate
a Nation’s Economic Health (cont.)
Productivity rate
An economic measure that tracks the increase
and decrease in the average level of output
per worker
Unemployment rate
The percentage of a nation’s labor force
unemployed at any time
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 29
Business Cycle
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 30
Government Actions in Recession/Depression
Monetary Policy
Federal Reserve decisions that determine the
size of the supply of money in the nation and
the level of interest rates
Fiscal Policy
Government influence on the amount of
savings and expenditures accomplished by
altering the tax structure and changing the
levels of government spending
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 31
Federal Deficit
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 32
Four Different Types of Competition
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 33
Supply Curve and Demand Curve
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 34
The Equilibrium, or Market, Price
Monopolistic competition
A market situation in which there are many buyers
along with a relatively large number of sellers
Product differentiation
The process of developing and promoting
differences between one’s products and all
competitive products
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 35
The Equilibrium, or Market, Price
Oligopoly
A market (or industry) situation in which there are
few sellers
Monopoly
A market (or industry) with only one seller, and
there are barriers to keep other firms from entering
the industry
• Natural monopoly: an industry that requires a huge
investment in capital and within which any
duplication of facilities would be wasteful
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 36
American Business Today
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 37
The Challenges Ahead
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 38
The Challenges Ahead
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 1 | Slide 39