MIE 201, Chapter 2 In Class Notes
MIE 201, Chapter 2 In Class Notes MIE 201
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This 3 page Class Notes was uploaded by Jenna Loehrer on Wednesday September 21, 2016. The Class Notes belongs to MIE 201 at North Carolina State University taught by M.K. Ward in Fall 2016. Since its upload, it has received 4 views. For similar materials see Intro to Management in Management at North Carolina State University.
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Date Created: 09/21/16
Chapter 2 InClass Notes (8.24) Understanding Basic Economics Economics: Sum total of all economic activities ● Microeconomics ● Macroeconomics Factors of Production ● Natural Resources ○ Things that are useful in their natural state ○ Ex: lumber, oil ● Human Resources ○ How large is a population in a given economy ● Capital ○ Ex: money, machines, tools, buildings ● Entrepreneurship ○ Focused on innovation and the initiative required for innovation ● Knowledge Scarcity and Tradeoffs ● Scarcity: finite supplies of resources ○ Important because creates competition and forces people to make tradeoffs ● Tradeoffs: giving up something to do something else/ receive something else ○ Opportunity cost ← → tradeoff Economic Systems (Macro) Communism Planned System Cuba, North Korea Socialism China Mixed Capitalism Free Market System United States Planned System vs Free Market System ● Advantages of FMS ○ Less regulation/ paperwork ○ Lower costs ○ Allows for competition ○ Efficient ● Advantages of Planned System ○ Equal amounts to everyone Chapter 2 InClass Notes (8.24) Understanding Basic Economics ● Disadvantages of FMS ○ Monopolies can form ● Disadvantages of Planned System ○ No motivation for growth or innovation ○ Not always equally distributed resources Nationalization versus Privatization ● Nationalization: Government takeover of selected companies or industries ● Privatization: Turning over services once performed by the government by allowing private businesses to perform them instead Point of Equilibrium: optimal point of balance between supply and demand Competition in FreeMarket System (Macro View) Pure Competition Monopoly Oligopoly Monopolistic Competition Pure Competition: product or service must have identical features across all competitors, low barriers to entry Monopoly: one company/supplier of product in a given market (no competitors), supplier can set price, no requirements for quality of product/services Oligopoly: few major competitors, but not many in given market ● Example: airline industry Monopolistic Competition: numerous competitors, products are not identical (distinguishing features between products) ● Example: blenders Business Cycles: fluctuations that an economy experiences over several years ● Expansion: economy is growing, increasing number of jobs, healthy amount of innovation, customers have money to spend ● Contraction: customers lack money to spend ● Recession: 2 consecutive of declines in GDP (basic measure of a country’s economic output) ● Depression: no exact time limit, usually involves collapse of major industry ● Recovery: customer spending and production begin to rise again Unemployment (accounts for people 16 years+ looking for a job) Chapter 2 InClass Notes (8.24) Understanding Basic Economics ● Frictional Unemployment: natural flow of unemployed people because of life changes, not because of lack of skills ○ Ex: someone going to college, moving to a city ● Structural Unemployment: mismatch between lack of skills and current needs of employers ○ Ex: interviewee lacked skills for applied job, ● Cyclical Unemployment: shift of economies result in loss of jobs during business cycles (recession, depression) ● Seasonal Unemployment: ○ Ex: Farmers, retail stores
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