Chapter 01 The Dynamics of Business and Economics
Define Basic concepts such as business, product, and profit.
Identify the main participants and activities of business and explain why studying business is important.
Define economics and compare the four types of economic systems.
Describe the role of supply, demand, and competition in a free-enterprise system.
Specify why and how the health of the economy is measured.
Trace the evolution of the American economy and discuss the role of the entrepreneur in the economy.
- Define Basic concepts such as business, product, and profit.
- Business refers to the individuals and organizations that seek a profit by providing products that satisfy peoples needs.
- Product refers to goods, services, or ideas with tangible and intangible attributes that provide satisfaction and benefits.
- The primary goal of business is to earn a profit.
Non-profit organizations do not have the fundamental purpose of earning profits, although they may provide goods and services.
- Identify the main participants and activities of business and explain why studying business is important.
- The main participants of business are owners, employees, and customers
- Activities of businesses include primarily management, marketing, and finance.
Define economics and compare the four types of economic systems
Economics is the study of how resources used in the production of goods and services are distributed within a social system.
Types of economic systems
- Resources = natural resources, human resources, and financial resources.
- Capitalism (or free enterprise)
- Mixed economies
Describe the role of supply, demand, and competition in a free-enterprise system
Supply is the quantity of goods and services that businesses are willing to sell for different prices at a specific time
Demand is the quantity of goods and services that consumers are willing to buy for different prices at a specific time.
Equilibrium is the point at which supply and demand curves intersect, indicating that supply and demand are equal at that point in time.
Competition is the rivalry among businesses for consumers dollars.
Four types of competitive environments:
- Pure competition
- Monopolistic competition
Specify why and how the health of the economy is measured
Economic cycles and productivity
Gross domestic product (GDP)
- Economic expansion (may result in inflation)
- Economic contraction (may result in recession)
Trace the evolution of the American economy and discuss the role of the entrepreneur in the economy
- Colonies were largely self-supporting
Manufacturing and Marketing Economies
- Development of new technology and factories
Service and Internet-based Economy
- U.S. becomes and economy devoted to manufacturing goods and service.
- Business became more concerned with the needs of the consumer and entered the marketing economy
Entrepreneur risks wealth, time and effort to develop for profit an innovative product or way of doing something.
- Increased standards of living
- U.S. moves to a service economy
- On-line business fastest growing segment