INTRO to BUSINESS Notes

INTRO to BUSINESS Notes - INTRO to BUSINESS Notes 8-27-08...

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Unformatted text preview: INTRO to BUSINESS Notes 8-27-08 A. The Economic Environment • The Role of Profit • A business provides goods and services for a profit • Businesses are created by our free enterprise economy, we have the freedom to start a business, hire people, and sell products • They have the freedom to succeed and make a profit, and also to fail • The FIVE Factors of Production • Land (natural resources) • Labor (workers) • Capital (machines, tools, buildings, financial subsidiaries) • Entrepreneurship • Knowledge/Information • World Economic Systems • Communism • Ownership • Control • Competition • Zero competition • Consumer Preferences • Almost none, one type of each product • Employment Options • Profit/Taxation • Huge taxation • Som • Ownership • Private and public • Control • Competition • Some • Consumer Preferences • Some • Employment Options • Profit/Taxation • Large Taxation • Free Enterprise • Ownership • Almost completely private • Control • Competition • Lots • Consumer Preferences • Lots INTRO to BUSINESS Notes • Employment Options • Nearly unlimited • Profit/Taxation • Moderate Taxation • Adam Smith • 1723-1790, Smith was a Scottish political economists and moral philosopher • Wrote “The Wealth of the Nations” in 1776 • Father of “free trade” and “capitalism” • Free Market Capitalism • Self-interested behavior regulated strictly by competition and the laws of supply and demand • “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but it is from their regard for their own self interest” • Spem: if people do the job that they are most skilled at and inter- ested in, they will pursue their own profit and enhance the wealth of the whole society • In a world with perfect competition, supply and demand (the invisible hand) will determine prices, and provide society with what they need and want • Atomistic Markets: Infinite Buyers/Sellers • No outside influence (govt.) • Competitiveness of Markets • Atomistic or Perfect Competition • Monopolistic Competition • Starburst, Skittles, iPods • knockoffs • Oligopoly • Minimal choice for a product, few companies • Cars, Airlines, Steel, Cable • Monopoly • No choice, one company selling one product • Electricity, gas, water • Elasticity • Degree to which a demand or supply curve reacts to a change in price is the curve’s elasticity • Elastic Demand (Snickers) • many alternatives, varying prices • Inelastic Demand (gas) • few alternatives, people will pay any price • Economic Indicators • GDP (recession=GDP goes down for 2 quarters) • Productivity • Unemployment Rate INTRO to BUSINESS Notes • Frictional • quitting one job looking for another • Cyclical • if an industry experiences trouble and needs to lay people off temporarily • Structural • mismatch between skills of person looking for job and skills needed...
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This note was uploaded on 12/03/2009 for the course ABS 08 taught by Professor Staff during the Fall '08 term at Colorado.

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INTRO to BUSINESS Notes - INTRO to BUSINESS Notes 8-27-08...

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