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Prentice Hall, 2007 Excellence in Business, 3e Chapter 1 - 1

In Pursuit of Prosperity:The Fundamentals of

Business and Economics

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This Course

Will Help Your Career Learn what it takes to run a business

Build a business vocabulary Develop workplace skills

Learn about various occupations

Appreciate business careers today

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What is a Business?

For-Profit

Money motive

Not-for-profit

Social service

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Categories of Business

Goods-producing

Services

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What is Economics?

Microeconomics

Macroeconomics

Economic system

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Factors of Production

Resources

Capital

Entrepreneurs

Knowledge

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Types of Economic Systems

Free-market system

Capitalism

Mixed capitalism

Planned system

SocialismCommunism

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Microeconomics

The Forces of Supply and

Demand

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How Does a Free-Market

System Work? Supply and demand

Competition Government intervention

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Understanding Demand

Consumer income

Consumer preferences

Price of substitute goods

Price of complementary goods

Advertising and promotion spending Expectations about future prices

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Demand Curve for Airline

Tickets A demand curve is the relationship between

the amount of product that buyers will

purchase at various prices. Demand curves typically slope downward.

When airlines reduce ticket prices, demand

for airline tickets rises.

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Expected Shifts in Demand Curve

Consumer Income

Consumer Preferences

Price of Substitutes

Price of Complementary Goods

Advertising-Promotion

Consumer Expectations

Number of Buyers

Variable Shifts Right When:Increases

More Favorable

Increases

Decreases

Increases

Optimistic

Increases

Shifts Left When:Decreases

Less Favorable

Decreases

Increases

Decreases

Pessimistic

Decreases

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Understanding Supply

Goods and services

Supply

Price

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Supply Curve for Airline

Tickets A supply curve is the relationship between

prices and quantities sellers are willing to

offer for sale, regardless of demand. Supply curves typically slope upward.

When ticket prices rise, quantity supplied

also increases.

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Expected Shifts in Supply Curve

Costs of Inputs

Number of Competitors

New Technology

Suppliers Expect That

Future Sales Prices

Variable Shifts Right When:

Decreases

Decreases

Decreases

Production Costs

Will Decline

Shifts Left When:

Increases

Increases

Increases

Production Costs

Will Increase

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How Demand and Supply

Interact High price reduces demand

Low price reduces supply Right price balances supply and

demand

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Macroeconomics

Issues for the Entire Economy

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Free-Market Competition

Pure competition

Monopoly

Oligopoly

Monopolistic competition

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Competitive Advantage

Price

Speed

Quality

Service

Innovation

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The Role of Government

Promotes competition

Regulates industries

Deregulates industries

Protects rights of stakeholders

Contributes to economic stability

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Fostering Competition

Antitrust legislation

Mergers and acquisitions

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Regulating and

Deregulating Industries

Fair competition

Business ethics

Working conditions

Public safety

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Protecting Stakeholders

Consumer Product Safety Commission (CPSC)

Environmental Protection Agency (EPA)

Equal Opportunity Employment Commission(EEOC)

Federal Communications Commission (FCC)

Federal Aviation Administration (FAA) Federal Energy Regulation Commission (FERC)

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Protecting Stakeholders

Federal Highway Administration (FHA)

Federal Trade Commission (FTC)

Food and Drug Administration (FDA)

Interstate Commerce Commission (ICC)

Occupational Safety and Health Administration

(OSHA) Securities and Exchange Commission (SEC)

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Contributing to Economic

Stability Business cycle

Economic expansion

Economic contraction

Fiscal policy

Revenue and spending

Monetary policy

Interest rates

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Monitoring Major Economic

Indicators Interest rates

Housing starts

Unemployment statistics

Durable-goods orders

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Measuring Price Changes

Purchasing power

Inflation

Deflation

Consumer Price Index (CPI)

Producer Price Index (PPI)

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Measuring National Output

Gross NationalProduct (GNP)

Gross DomesticProduct (GDP)

Dollar Value

YesYesFinal Goods

and Services

YesYesDomestic Businesses

NoYesForeign-OwnedBusinesses

YesNoOverseas Operations

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Ten Economic

Performance Indicators Prime interest rate

Housing starts

Unemploymentrate

Durable-goodsorders

Labor productivityrate

Balance of trade

Inflation rate

Consumer priceindex

Gross domesticproduct

Producer priceindex

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History of U.S. Economic

Growth Age of Industrialization (1900-1944)

Postwar Golden Era (1945-1969)

Turbulent Years (1970-1979)

Rise of Global Competition (1980-1989)

New Economy and Beyond (1990 to Today)

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Challenges of Globalization

Products and services

Managing a small business

Globalization and workforce diversity

Ethics and social responsibility

Technology and electronic commerce

Documents

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