understanding economic systems and business chapter 1 the future of business the essentials 4 th...
Post on 19-Dec-2015
216 views
TRANSCRIPT
![Page 1: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/1.jpg)
UnderstandingEconomic
Systems andBusiness C
HA
PT
ER
1
The Future of BusinessThe Essentials 4th EditionGitman & McDaniel
Prepared byDeborah Baker
© Y
ash
uh
ide
Fu
mo
to/G
etty
Imag
es
Chapter 1Copyright ©2009 by South-Western, a division of Cengage Learning. All rights reserved
![Page 2: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/2.jpg)
2
Learning Goals
CH
AP
TE
R 11 How do businesses and not-for-profit organizations
help create our standard of living?
2 What are the sectors of the business environment, and how do changes in them influence business decisions?
3 What are the primary features of the world’s economic systems, and how are the three sectors of the U.S. economy linked?
4 How do economic growth, full employment, price stability, and inflation indicate a nation’s economic health?
![Page 3: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/3.jpg)
3
Learning Goals (continued)
CH
AP
TE
R 15 How does the government use monetary policy and
fiscal policy to achieve its macroeconomic goals?
6 What are the basic microeconomic concepts of demand and supply, and how do they establish prices?
7 What are the four types of market structure?
8 Which trends are reshaping the business, micro-, and macroeconomic environments and competitive arena?
![Page 4: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/4.jpg)
4
Goods and services that are the basis of our
standard of living
Goods and services that are the basis of our
standard of living
Jobs, goods and services that help
determine our quality of life
Jobs, goods and services that help
determine our quality of life
The Nature of Business
1
A business is an organization that strives for a profit by providing goods and services desired by its customers.
Businesses provide…
© A
P Im
ages
/ P
aul S
aku
ma
![Page 5: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/5.jpg)
5
The Nature of Business
standard of living
A country’s output of goods and services that people can buy with the money they have.
1
![Page 6: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/6.jpg)
6
The Nature of Business
quality of life
The general level of human happiness based on such things as life expectancy, educational standards, health, sanitation, and leisure time.
1
![Page 7: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/7.jpg)
7
The Nature of Business
RevenueRevenue
less
CostsCosts
ProfitProfit
equals
The money a company earns from providing services or selling goods to customers.
Expenses that a company incurs from creating and selling goods and services.
The money left over afterall expenses are paid.
1
![Page 8: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/8.jpg)
8
Not-for-Profit Organizations
Government is the largest
not-for-profit group.
Government is the largest
not-for-profit group.
Not-for-profit organizations account for more than 28% of economic activityIn the U.S.
Not-for-profit organizations account for more than 28% of economic activityIn the U.S.
A not-for-profit organization is an organization
that exists to achieve some other goal than the
usual business goal of profit.
A not-for-profit organization is an organization
that exists to achieve some other goal than the
usual business goal of profit.
1
![Page 9: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/9.jpg)
9
Not-for-Profit Organizations
Develop strategyDevelop strategy
Measure performanceMeasure performance
Improve productivityImprove productivity
Create budgetsCreate budgets
Encourage innovationEncourage innovation
Demonstrate accountabilityDemonstrate accountability
1
![Page 10: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/10.jpg)
101
Factors of Production
1. Natural resources
2. Labor
3. Capital
4. Entrepreneurship
5. Knowledge
![Page 11: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/11.jpg)
11
CONCEPT check
1
Explain the concepts of revenue, costs, and profit.
What are the five factors of production?
What is the role of the entrepreneur in society?
![Page 12: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/12.jpg)
12
Understanding the Business Environment
2
What are the sectors of the business environment, and how do changes in them influence business decisions?
2
![Page 13: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/13.jpg)
13
External Environment
Economic
Political and legal
Demographic
Social
Competitive
Global
Technological
2
![Page 14: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/14.jpg)
14
Economic Influences
2
Fluctuations in economic activity create business cycles.
Government can impact the level of economic activity through taxes and interest rate levels.
Forces of supply and demand determine how prices and quantities of goods and services behave in a free market.
![Page 15: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/15.jpg)
15
Political and Legal Influences
2
Amount of government activity
Types of laws passed
General political stability of government
![Page 16: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/16.jpg)
16
Demographic Factors
demography
The study of people’s vital statistics, such as their age, race and ethnicity, and location.
2
![Page 17: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/17.jpg)
17
Demographic Factors
GenderGender
RaceRace
EthnicityEthnicity
LocationLocation
AgeAge
2
![Page 18: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/18.jpg)
18
Demographic Factors
Generation YGeneration Y
Generation XGeneration X
Baby BoomersBaby Boomers
Born between 1979-1997Born between 1979-1997
Born between 1964-1977Born between 1964-1977
Born between 1946-1964Born between 1946-1964
2
![Page 19: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/19.jpg)
19
Social Factors
AttitudesAttitudes
ValuesValues
LifestylesLifestyles
2
![Page 20: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/20.jpg)
20
Technology
technology
The application of science and engineering skills and knowledge to solve production and organizational problems.
2
![Page 21: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/21.jpg)
21
CONCEPT check
Define the components of the internal and external business environments.
What factors within the economic environment affect businesses?
Why do demographic shifts and technological developments create both challenges and new opportunities for business?
2
![Page 22: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/22.jpg)
22
How Business and Economics Work
3
What are the primary features of the world’s economic system, and how are the three sectors of the economy linked?
3
![Page 23: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/23.jpg)
23
economics
Economics is the study of how a society uses scarce resources to produce and distribute goods and services.
3
How Business and Economics Work
![Page 24: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/24.jpg)
24
Economic Concerns
What is produced?
How much is produced?
How is it produced?
For whom is it produced?
3
![Page 25: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/25.jpg)
253
Global Economic Systems
Free Market / CapitalismFree Market / Capitalism
Mixed EconomiesMixed Economies
Planned EconomiesPlanned Economies CommunismSocialism
CommunismSocialism
![Page 26: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/26.jpg)
26
Differentiation among Economic Systems
Allocating limited resources
Choosing goods and services to produce
Determining how and by whom to produce goods
Distributing goods and services
Global Economic Systems
3
![Page 27: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/27.jpg)
27
capitalism
An economic system based on competition in the marketplace and private ownership of the factors of production; also known as the private enterprise system.
3
Global Economic Systems
![Page 28: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/28.jpg)
28
communism
An economic system characterized by government ownership of virtually all resources, government control of all markets, and economic decision-making by central-government planning.
3
Global Economic Systems
![Page 29: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/29.jpg)
29
socialism
An economic system in which the basic industries are owned either by the government itself or by the private sector under strong government control.
3
Global Economic Systems
![Page 30: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/30.jpg)
30
mixed economies
Economies that combine several systems; for example, an economy where the government owns certain industries but others are owned by the private sector.
3
Global Economic Systems
![Page 31: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/31.jpg)
31
Macroeconomics and Microeconomics
macroeconomics
The subarea of economics that focuses on the economy as a whole by looking at aggregate data for large groups of people, companies or products.
microeconomics
The subarea of economics that focuses on individual parts of the economy, such as households or firms.
3
![Page 32: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/32.jpg)
32
CONCEPT check
What is economics, and how can you benefit fromUnderstanding basic economic concepts?
Compare and contrast the world’s major economic systems. Why is capitalism growing, communism declining, and socialism still popular?
What is the difference between macroeconomics and microeconomics?
3
![Page 33: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/33.jpg)
33
Understanding the Business Environment
4
How do economic growth, full employment, and price stability indicate a nation’s economic health?
4
![Page 34: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/34.jpg)
34
economic growth
An increase in a nation’s output of goods and services.
The more a nation produces, the higher its standard of living.
Economic Growth
4
![Page 35: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/35.jpg)
35
gross domestic product
The total market value of final goods and services produced within a nation’s borders each year.
Economic Growth
4
![Page 36: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/36.jpg)
36
recession
A decline in GDP that lasts for at least two consecutive quarters.
4
Business Cycles
![Page 37: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/37.jpg)
37
full employment
The condition when all people who want to work and can work have jobs.
4
Keeping People on the Job
![Page 38: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/38.jpg)
38
unemployment rate
The percentage of the total labor force that is not working but is actively looking for work.
4
Measuring Unemployment
![Page 39: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/39.jpg)
394
Types of Unemployment
FrictionalFrictional
StructuralStructural
CyclicalCyclical
SeasonalSeasonal
Short-term unemployment that is notrelated to the business cycle
Short-term unemployment that is notrelated to the business cycle
Unemployment that is caused by a mismatch between jobs and workers skills
Unemployment that is caused by a mismatch between jobs and workers skills
Unemployment that occurs when a downturn in the business cycle reduces demand for labor
Unemployment that occurs when a downturn in the business cycle reduces demand for labor
Unemployment that occurs duringspecific seasons in certain industries
Unemployment that occurs duringspecific seasons in certain industries
![Page 40: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/40.jpg)
40
inflation
The situation in which the average of all prices of goods and services is rising.
4
Keeping Prices Steady
![Page 41: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/41.jpg)
414
Types of Inflation
Demand-Pull Inflation
Demand-Pull Inflation
Cost-PushInflation
Cost-PushInflation
Demand for goods and services is greater than the supply
Demand for goods and services is greater than the supply
Increases in production costs push up prices
Increases in production costs push up prices
![Page 42: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/42.jpg)
42
CONCEPT check
What is a business cycle? How do businesses adapt to periods of contraction and expansion?
Why is full employment usually defined as a target percentage below 100 percent?
What is the difference between demand-pull and cost-push inflation?
4
![Page 43: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/43.jpg)
43
Achieving Macroeconomic Goals
5
How does the government use monetary policy and fiscal policy to achieve its macroeconomic goals?
5
![Page 44: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/44.jpg)
44
Federal Reserve System (the Fed)
The central banking system of the United States.
Monetary Policy
5
![Page 45: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/45.jpg)
45
crowding out
The situation that occurs when government spending replaces spending by the private sector.
Fiscal Policy
5
![Page 46: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/46.jpg)
46
Fiscal Policy
5
Federal BudgetDeficit
Federal BudgetDeficit
NationalDebt
NationalDebt
The condition that occurs when the federal government spends more for programs than it collects in taxes.
The condition that occurs when the federal government spends more for programs than it collects in taxes.
The accumulated total of all of the federal government’s annual budgetdeficits.
The accumulated total of all of the federal government’s annual budgetdeficits.
![Page 47: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/47.jpg)
47
A High National Debt
Cons:
Not everyone holds the debt
Crowding out private investment
Pros:
Contributes to: Economic growth High employment Price stability
5
![Page 48: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/48.jpg)
48
CONCEPT check
What are the two kinds of monetary policy?
What fiscal policy tools can the government use to achieve its macroeconomic goals?
What problems can a large national debt present?
5
![Page 49: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/49.jpg)
49
Microeconomics
6
What are the basic microeconomic concepts of demand and supply, and how do they establish prices?
6
![Page 50: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/50.jpg)
50
demand
The quantity of a good or service that people are willing to buy at various prices.
The Nature of Demand
6
![Page 51: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/51.jpg)
51
supply
The quantity of a good or service that businesses will make available at various prices.
The Nature of Supply
6
![Page 52: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/52.jpg)
52
Factors Causing Demand and Supply Curve Shifts
6
Buyers’ incomes
Buyers’ preferences/tastes
Prices of substitute products
Expectations about future prices
Number of buyers
Technology
Resource prices
Changes in prices of other products that can be produced with the same resources
Number of suppliers
Taxes
Shift Demand Shift Supply
Exhibit 1.9
![Page 53: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/53.jpg)
53
CONCEPT check
What is the relationship between prices and demand for a product?
How is market equilibrium achieved? Describe the circumstances under which the price for gasoline would have returned to equilibrium in the U.S. after Hurricane Katrina.
Draw a graph that shows an equilibrium point for supply and demand.
6
![Page 54: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/54.jpg)
54
Competing in a Free Market
7
What are the four types ofmarket structure?
7
![Page 55: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/55.jpg)
55
MonopolisticCompetition
PerfectCompetition
PureMonopoly
Oligopoly
Four Types of Market Structures
7
![Page 56: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/56.jpg)
56
Perfect Competition
7
A large number of small firms are in the market
The firms sell similar products Buyers and sellers have good
information about prices, sources of supply, etc.
It is easy to open a new business or close an existing one
![Page 57: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/57.jpg)
577
Pure Monopoly
A single firm accounts for all industry sales
The firm is the industry Barriers to entry prevent new firms
from competing with the existing firm
![Page 58: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/58.jpg)
587
Monopolistic Competition
Many firms are in the market The firms offer products that are close
substitutes but still differ It is relatively easy to enter the market
![Page 59: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/59.jpg)
597
Oligopoly
A few firms produce most or all of the output
Large capital requirements or other factors limit the number of firms
![Page 60: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/60.jpg)
60
CONCEPT check
What is meant by market structure?
Compare and contrast perfect competition and pure monopoly. Why is it rare to find perfect competition?
How does an oligopoly differ from monopolistic competition?
7
![Page 61: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/61.jpg)
618
Which trends are reshaping the micro- and macroeconomic environments and the competitive arena?
8
Trends in the Business Environment and Competition
![Page 62: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/62.jpg)
62
Not Over the Hill Yet
Baby boomers make up 42 percent of the workforce.
By 2010, 25 percent of all employments will be of retirement age. Many will work beyond the traditional retirement age of 65.
Today’s workforce spans four generations.
8
![Page 63: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/63.jpg)
63
Not Over the Hill Yet
Challenges from the aging population include:
Health care
Financial services
Government
Society
8
![Page 64: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/64.jpg)
64
relationship management
The practice of building, maintaining, and enhancing interactions with customers to develop long-term satisfaction through mutually beneficial partnerships.
Includes:• Supply Chain Management• Relationship Marketing
8
Meeting Competitive Challenges
![Page 65: Understanding Economic Systems and Business CHAPTER 1 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker ©](https://reader036.vdocuments.us/reader036/viewer/2022081515/56649d2b5503460f94a0059a/html5/thumbnails/65.jpg)
65
CONCEPT check
What steps can companies take to benefit from the aging of its workers and to effectively manage a multigenerational workforce?
Why is the increasing demand for energy worldwide a cause for concern?
Describe several strategies that companies use to remain competitive in the global economy.
8