02 EconPolitEnviron

02 EconPolitEnviron - ~ BCOR 1010 ~ Introduction to...

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Unformatted text preview: ~ BCOR 1010 ~ Introduction to Business Section 100 Instructor: Beth Cross Office: Room 345E – CESR Suite, Koelbel Email: beth.cross@colorado.edu Email: beth.cross@colorado.edu Cell #: 303 956-6010 Office # 303 492-4463 Office Hours, Spring, 2009: Office Mon. 11:30a-1:00p, Wed. 10:30a-12:00n Wed. and by appointment and 1 Ground Rules Be present, not just in the room… Be present not Respect class start time and end time. and Your questions and opinions are valid. Your participation will make a difference. Cell phones off or on vibrate. Laptops are for note-taking, not for… Take all distractions outside. Respect each other… this is college… 2 Course Outline – 4 Parts 1. The Context Of Modern Business (4 weeks) (4 Part One: 2. 2. 3. Part Two: Business As an Entity (1 week) (1 The Interrelated Functions Of Business (9 weeks) (9 Part Three: Part Four: 4. 4. Leadership (1 week) (1 3 PART ONE: THE CONTEXT PART OF MODERN BUSINESS OF A. The Economic Environment A. – – – – World’s Economic Systems Factors of Production The Role of Profit The Market Economy The Laws of Supply and Demand Imperfect Competition Macro Measures of Economic Health 4 Capitalism Applebees, Google, Nike, Home Depot, Applebees, Bolder Boulder, GM, Verizon . . . Bolder What is profit? 5 Capitalism – The Role Of Profit Freedom… – Free to pursue profit – Free to succeed or fail – Free to make choices 6 The World’s Economic Systems An economic systemHow a society allocates its resources to How provide goods and services provide - Unlimited demand, Limited resources Unlimited Ownership and control of resources control - Government/public or Private Government/public Private 7 Factors of Production Resources used to produce goods and services: 1. Land (natural resources) 2. Labor (workers) 3. Capital (machines, tools, buildings, equipment) 4. Entrepreneurship (desire to take a risk and start a business) business) 5. Knowledge/information 8 Factors of Production Japan Land Population Patents (‘02-04) Patents average average GDP per capita Est GDP growth rate Est Russia 17M Sq/km 143M 18,264 $14,454 6.3% .4M Sq/km 128M 110,000 $38,390 1.9% Economic Economic Freedom Index Freedom 2.3 3.5 Source: Economist 2007/2008 9 The World’s Economic Systems Freedom Communism -- Socialism -- Capitalism 10 10 The World’s Economic Systems Communism - all factors owned by all the people (government) the – “From each according to his abilities, to each From according to his needs”- Karl Marx according – Government / Central planning – No competition – Cuba, North Korea 11 11 The World’s Economic Systems Socialism - some factors owned by all the people the – Equal allocation of resources – Government / Central planning for basic Government goods and services goods – Most basic industries owned by the Most government; individuals own small businesses businesses – High taxation – Sweden, Israel 12 12 The World’s Economic Systems Capitalism – most factors of production are privately held and used to make profit profit – Competition and Freedom – Private owners make a profit by providing Private products that satisfy customers: products Tangible / Goods Intangible / Services or Ideas 13 13 Adam Smith Adam 1723-1790 1723-1790 Scottish Political Scottish Economist and Moral Philosopher Philosopher The Wealth of Nations, 1776 1776 Father of Free Trade Father and Capitalism and 14 14 Free Market Capitalism Self-interested Behavior – – – – – Producers Consumers Labor Force Investors Entrepreneurs Regulated by Competition 15 15 Adam Smith “It is not from the benevolence of the butcher, It the brewer, or the baker that we expect our dinner, but from their regard to their selfdinner, interest.” The drive of individual self-interest in an The environment of similarly motivated individuals will result in competition, and the competition will result in providing goods that society wants in the quantities and at the prices that society wants. wants. 16 16 Gordon Gekko Wall Street “Greed Is Good” 17 17 Requirements/Characteristics Requirements/Characteristics Of the Free Market (Adam Smith) (Adam “Atomistic Markets”: Infinite Number Of Atomistic Infinite Buyers and Sellers Buyers All economic actors operate with the drive of All “self- interest” Competition regulates the market No Outside Influence; i.e. Government Result: All resources are allocated to Result: their most efficient (smartest) uses their 18 18 Free Market Capitalism Competition will result in the optimal Competition quantity and variety of goods quantity The “Invisible Hand” guides the market “Laissez Faire” – Government stays out Society’s welfare is maximized Society’s 19 19 Supply and Demand Equilibrium Price Demand Curve $5.00 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.25 $0.00 10 Supply Curve Equilibrium Price PRICE 20 30 QUANTITY 40 50 60 20 20 Elasticity The degree to which a demand or supply curve reacts The to a change in price is the curve's elasticity elasticity Elastic Demand – Many alternatives – Conoco gasoline… Seagate 200MB Hard drive… Inelastic Demand – – Few or no alternatives Drinking Water… 5” Floppy disk… 21 21 Competitiveness of Markets “Atomistic” or “Perfect” Competition (“Pure”) (“Pure”) Atomistic” – Infinite number of buyers and sellers Monopolistic Competition Monopolistic – Many sellers… some differentiation… – Starbursts, Skittles, Gummy Bears, etc… Starbursts, Oligopoly Oligopoly – Few sellers (barriers to entry) – Airplane Manufacturers, Coke/Pepsi, Navteq/Tele-Atlas Monopoly – One seller – Electricity, Water, Natural Gas, Cable Electricity, 22 22 ...
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