11.2.10 - 11.2.10 Understanding How Economics Affects...

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11.2.10 Understanding How Economics Affects Business - How Economic Conditions Affect Businesses What is Economics? Economics – study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals Macroeconomics – part of economics study that looks at the operation of a nation’s economy as a whole Microeconomics – part of economic study that looks at the behavior of people and organizations in particular markets Resource development – study of how to increase resources and to create the conditions that will make better use of those resources The Secret to Creating a Wealthy Economy Thomas Malthus The secret to economic development is contained in the phrase: “You can give a man a fish and feed him for a day, or you can teach a man to fish and feed him for life.” Key to a healthy economy is knowledge Adam Smith and the Creation of Wealth Adam Smith – Father of Modern Economics Smith was economist that had vision and created concept of invisible hand According to Adam Smith’s theory, business owners in a market economy are motivated to work hard because they know they will earn, and keep, the rewards of their labor. When they prosper, as the owner of this store has, they are able to add employees and grow, indirectly helping the community and the larger economy grow in the process Completely free market => eBay How Businesses Benefit the Community Invisible hand – a phrase coined by Adam Smith to describe the process that turns self-directed gain into social and economic benefits for all
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11.2.10 - 11.2.10 Understanding How Economics Affects...

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