Chapter 2 - Chapter 2:How economics affects business I. How...

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Chapter 2 : How economics affects business I. How economic conditions affect business a. What is economics? a.i. Economics : a.i.1. the study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals a.ii. macroeconomics : a.ii.1. looks at the operation of a nation’s economy as a whole a.iii. microeconomics a.iii.1. looks at the behavior of people and organization sin particular markets a.iv. resource development : the study of how to increase resources a nd to create conditions that will make better use of those resources b. Why economics was known as the “dismal science b.i. Big populations good or bad b.ii. Challenge for macroeconomics is to determine what makes some countries relatively wealthy and others relatively poor and then to implement policies and programs that lead t increased prosperity for everyone in all countries c. Growth Economics and Adam Smith c.i. Adam smith was one of firs tpoeple to imagine a system for creating wealth and improving the lives of everyone c.ii. Believed that freedom was vital to any economy c.iii. Basis of theory was desire for improving one’s condition in life d. How busineses benefit the community d.i. Busiensspoeple work to improve their own prosperity, but in theprocess they improve the economy and help others grow d.ii. The invisible hand : turns self-directed gain into social and economic benefits for all d.iii. how do they help others while trying ot help themselves? d.iii.1. Example, farmers become wealthy by selling crops to others, so they hire workers to produce more food. As a result, people in the area have plenty of food available and some have jobs on the farms. So the self-centered efforts of farmerers can lead others to have job snad food II. Understanding Free Market Capitalsim a. As businesspeople created more wealth, great disparities in wealth remained or even increased b. Capitalism is the sysem that has led to wealth creaiotn in much of the world b.i. Capitalism
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b.i.1. an economic system in which all or mos of ht efactors of production and distirbuoitn are privately owned and operated for profit c. The fudnaitons of capitalism c.i. Right to private property c.ii. Right to own a business and to keep all of that business’s profits c.iii.
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This note was uploaded on 02/23/2012 for the course MGT 101 taught by Professor Staff during the Fall '10 term at Texas State.

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Chapter 2 - Chapter 2:How economics affects business I. How...

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