Chapter 1: Exploring the World of Business and Economics Are

1-1 Your Future in the Changing World of Business: The key word in this heading is changing. When faced with both economic problems and increasing competition not only from firms in the United States but also from international firms located bin other parts of the world

1-1a Why Study Business? The potential benefits of higher education are enormous. To begin with, there are economic benefits. Over their lifetimes, college on average earn much more than high school graduates. To be a Successful Employee: Cultural (or workplace) diversity refers to the difference among people in a workforce owing to race, ethnicity, and gender. To Improve Your Management Skills Many employees want to become management because managers because managers often receive higher salaries and can earn promotions within an organization. •Interpersonal skills- The ability to deal effectively with individual employees, other managers within the firms, and people outside the firm. •Analytic skills- The ability to identify problems correctly, generate reasonable alternatives, and select the "best" alternative to solve problems. •Technical skills- The skills required to accomplish a specific kind of work being done in an organization. •Conceptual skills- The ability to think in abstract terms in order to see the "big picture."

1-1b Special Note to Business Students- It is important to begin reading this text with one thing in mind: This business course does have to be difficult.

1-2 Business: A Definition: is the organized effort or individuals to produce and sell, for a profit, the goods and services that satisfy society's needs.

1-2a The Organized Effort of Individuals: For a business to be organized, it must be combine four kinds of resources: material, human, financial, and informational. For our purposes, e-Business can be defined as the organized effort of individuals to produce and sell for a profit, the goods and services that satisfy society's needs through the facilities available on the internet.

1-2b Satisfying Needs: The ultimate objective of every firm must be to satisfy the needs of its customers. People generally do not buy goods and services simply to own them; they buy goods and services to satisfy particular needs

1-2c Business Profit: A business receives money (sales revenue) from its customers in exchange for goods or services. It must also pay out money to cover the expenses involved in doing business. A negative profit, which results when a firm's expenses are greater than its sales revenue, is called a loss. A business cannot continue to operate at a loss for an indefinite period of time. The term stakeholders is used to describe all the different people or groups of people who are affected by an organization's policies, decisions, and activities

1-6 Types of Competition
-Competition is a rivalry among businesses for sales to potential cutomers
-Four Different Types of Competition : 1. Perfect-Many- Ex. Corn, Wheat, Peanuts, 2. Monopolistic-Many- Ex. Clothing, shoes, 3. Oligopoly- Few-, Ex. Automobiles, cereals, 4. Monopoly- One- Ex. Software Protected by copyright, Many Local Public Utilites

1-6a Perfect Competition is the market situation in which there are many buyers and sellers of a product, and no single buyer or seller is powerful enough to affect the price of that product.
-The basics of supply and demand - The supply is the quantity of a product that producers are willing to sell at each of various prices.
-The demand is the quantity of a product that buyers are willing to purchase at each of various prices.
-The Equilibrium, or Market, Price - the market prices of any product is the price at which the quantity demanded is exactly equal to the quantity supplied.

1-6b Monopolistic Competition - is a market situation in which there are many buyers along with a relatively large number of sellers.
-Product differentiation is the process of developing and promoting differences between one's products and all competitive products.

1-6c Oligopoly - is a market (or industry) situation in which there are few sellers.

1-6d Monopoly - is a market (or industry) with only one seller, and there are barriers to keep other firms from entering the industry

1-7 American Business Today
-Standard of living is a loose, subjective measure of how well off an individual or a society is,mainly in terms of want satisfaction through goods and services.

1-7a Early Business Development
-Barter is system of exchange in which goods or services are traded directly for other goods or services without using money.
-Domestic system is a method of manufacturing in which an entrepreneur distributes raw materials to various homes, where families process them into finished goods
-Factory system is a system of manufacturing in which all the materials, machinery, and workers required to manufacture a product are assembled in one place
-Specialization is the separation of a manufacturing process into distinct tasks and the assignment of the different tasks to different individuals.

1-7b Business Development in the 1900s
-1-7c A New Country: 2000 and Beyond
-A service economy is an economy in which more effort is devoted to the production of services than to the production of goods.

1-7d The Current Business Environment

  • Competitive, Global, Technological, and Economic Environments affect business today.
    -Social Media is defined as online interaction that allows people and businesses to communicate and share ideas, personal information, and information about products or services.
    -Sustainability creates and maintains the conditions under which humans and nature can exist in productive harmony, that permit fulfilling the social, economic, and other requirements of present and future generations.

1-7e The Challenge Ahead

1-3 types of economic systems

Economics: the study of how wealth is created and distributed
Microeconomics:the study of the desistió a made by individual and businesses
Maroeconomics:the study of the national economy and the global economy
Economy:the way in which people deal with the creation and distribution of wealth
Factors of production:reasources used to produce goods and services
Entrepreneur:a person who risks time,effort,and money to start and operate a business

Factors of production are the resources used to produce goods and services .there are four such factors:
1.)land and natural resources-elements that can be used in the production process to make appliances,automobiles,and other products
2.)labor -the time and effort that we use to produce good and service
3.)capital-the money,facilities,equipment,and machines
4.)entrepreneurship-the activity that organizes land and natural resources,labor,and capital

Four basic economic questions listed here determines a nations economy
1)what goods and services -and how much of each-will be produced?
2.)how will these good and services be produced?
3)for whom will these good and services be produced?
4.)who owns and who controls the major factors of production?

Capitalism:an economic system in which individuals own and operate the majority of businesses that provide goods and services
Invisible hand-a term created by Adam Smith to describe how an individuals personal gain benefits others and a nations economy
Market economy-an economic system in which businesses and individuals decide what to produce and buy,and the market determines quantities sold and prices

Larissez-afire capitalism
-right to create wealth
-right to own private property and resources
-right to economic freedom and freedom to compete
-right to limited government intervention

Capitalism in the United States-
Mixed economy:an economy that exhibits elements of both capitalism and socialism
Consumer products-goods and services purchased by individuals for personal consumption

Command economy-an economic system in which the government decides what goods and services will be produced,how they will be produced,for whom available good and services will be produced , and who owns and controls the major factor of production

Household->taxes ->government ->services->businesses<-taxes<-government <-services
Resource markets->resources->government -> govt.sepending->product market
product market->products->government->govt.sprnding ->resource markets
householde->consumer spending ->product markets->sales revenue ->businesses->wages rent interest->resource market->income->household:⏺
household->natural resources labor capital->resource markets ->natural reasource labor capital->businesses->goods services->product markets->goods and services->household:⏺

1-5 Different Phases in the Typical Business Cycle

1-5 A Business Cycle: is the recurrence of periods of growth and recession in a nation’s economic activity.The federal government has enacted a number of stimulus plans to help unemployed workers.In fact,businesses often expand and offer new products and services during the peak period to take advantage of consumers’ increased buying power.

1-5 B Recession:is two or more consecutive three-month periods of decline in a country’s GDP.The unemployment rises during a recession,total buying power declines.Pessimism that accompanies a recession often stifles both consumers and business spending.

1.5 C Depression:is a severe recession that lasts longer than a typical recession and has a larger decline in business activity when compared to a recession.Is characterized by extremely high unemployment rates,low wages, reduced purchasing power, lack of confidence in the economy, lower stock values, and a general decrease in business activity.

1-5 D Monetary policies:are the Federal Reserve’s decisions that determine the size of the supply of money in the nation and the level of interest rates.

1-5 E Fiscal policy:government influence on the amount of savings and expenditures;accomplished by altering the tax structure and by changing the levels of government spending.The federal government collects over $2 trillion in annual revenues,the government usually spends more than it receives.

1-5 F Federal deficit:a shortfall created when the federal government spends more in a fiscal year than it receives.For example,the government had a federal deficit for each year between 2002 and 2012.

Who are the four key players in an economic system?
-consumer
-government
-businesses
-financial bank

Type of economy the government owns and controls key business.what to produce and how to produce are determined based nation goals
socialism

This measure of a country’s performance involves monthly pricing a basket of goods and measures the change in price of these items over time-consumer

Competition
1.)perfect(many)
2.)monopolistic(many(
3.)oligopoly(few)
monopoly(one)