Popular in Exploring Business
Popular in Business
This 4 page Class Notes was uploaded by Amy Turk on Friday May 20, 2016. The Class Notes belongs to BUS 10123-002 at Kent State University taught by Dr. Diane DeRubertis in Spring 2015. Since its upload, it has received 12 views. For similar materials see Exploring Business in Business at Kent State University.
Reviews for Economics
Report this Material
What is Karma?
Karma is the currency of StudySoup.
You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!
Date Created: 05/20/16
ECONOMICS Capitalism ● people own and operate the majority of businesses that provide goods and services ● competition, supply, and demand ● pure capitalism = free-market system ○ all economic decisions are made without government intervention ○ Adam Smith ○ competition determines what goods/services people need ○ laissez-faire ● modified capitalism = government intervenes and regulates business to same extent ○ through laws Mixed Economics ● no country practices a pure form Capitalism ● lists state-owned companies on the stock market ● embraces globalization The Free-Enterprise System ● provides an opportunity for a business to succeed or fail on the basis of market demand ● companies that can efficiently manufacture and sell products that consumers desire will probably succeed ● consumers take their business to firms that have more competitive products ● United States ● people have the freedom to create their own productivity systems Supply & Demand ● demand = number of goods/services that consumers are willing to buy at different prices at a specific time ● supply = number of products that businesses are willing to sell at different prices at a specific time ● equilibrium price = when the supply and demand are equal ○ changing the price alters the supply curve ■ a new equilibrium results ○ supply and demand constantly changing in response to changes in economic conditions ■ prices vary according to these changes ● the wealthy can afford to buy more than they need and the poor can’t buy enough to survive Competition ● rivalry among businesses for consumer’s dollars ● fosters low prices by forcing producers to offer the best products at the most reasonable price ● improves the quality of goods ● pure competition = when many small businesses sell one standardized product ○ price determined solely by supply and demand ● monopolistic competition = fewer businesses and the small differences between the goods they sell ○ aspirin ○ soft drinks ○ vacuums ○ businesses have some power over the price… they can make consumers aware of product differences through advertising ● oligopoly = very few businesses selling a product ○ have control over prices ■ supplies a large portion of the products ○ exist when its expensive for new firms to enter the marketplace ● monopoly = when only one business provides a product ○ electricity ○ water ○ the cost of creating the good is so great that new producers cannot compete for sales ○ gov’t regulated prices Cycles & Productivity ● economic expansion = when an economy is growing and people are spending more money ○ standard of living rises ○ inflation can occur = continuing rise in prices ■ harmful if incomes do not increase at the same pace as rising prices ● economic contraction = when spending declines ○ businesses cut back on production and lay off workers ○ economy slows down ○ recession = decline in production, employment, and income ■ rising levels of unemployment = stifles demands for goods/services ■ the effect of forcing prices downward = deflation ● depression = severe recession ○ unemployment very high ○ consumer spending very low ● gross domestic product (GDP) = the sum of all goods and services produced in a country during a year ○ only those made within the country ● budget deficit = when a nation spends more than it takes in from taxes ○ when the gov’t needs money, it borrows from the public, banks, and foreign investors ○ to reduce the debt, the gov’t has to raise taxes or reduce spending The American Economy ● the US is a mixed economy with a foundation based on capitalism ● trade balance = the difference between our exports and imports ○ if negative = trade deficit ■ unhealthy for our economy ● consumer price index = measures changes in prices of goods or services ● per capita income = indicates the income level of “average” Americans ○ determines how much average consumers spend ● worker productivity = amount of goods/services produced for each hour worked ● manufacturing economy = one devoted to manufacturing goods and producing services rather than producing agricultural products ○ assembly line ● marketing economy = more concerned with needs of consumers ○ companies conduct research ○ advertising ● service economy = devoted to the production of services that make life easier for busy consumers Entrepreneurs ● person who risks his wealth, time, and effort to develop for profit an innovative product or way of doing something ○ creates new technology and management techniques ● American economic system = modified capitalism ○ the gov’t regulates business to preserve competition and protect consumers and employees ● gov’t agencies measure the health of the economy ○ minimizes the disruptive effects of economic fluctuations ○ reduces unemployment ○ reduces interest rates or increases its own spending ○ reduces inflation by slowing down economic growth ■ raises interest rates to discourage spending by consumers ● business ethics = the standards and principles used by the society to define appropriate or inappropriate conduct in the workplace ● good ethics is good business
Are you sure you want to buy this material for
You're already Subscribed!
Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'