chpt 1 overview+ questions.doc

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Department
Management (MGT)
Course
MGTA01H3
Professor
mcckoncey
Semester
Summer

Description
Chapter 1 Understanding the U.S. Business System Chapter Overview Businesses are organizations that produce or sell goods or services to make a profit. Each business must operate in the context of its economic system. Economic systems differ in terms of who owns or controls the five basic factors of production: labor, capital, entrepreneurs, physical resources, and information resources. In planned economies, the government controls all or most factors. In market economies, individuals and businesses control the factors of production and engage in free exchange. The U.S. is a market economy, based on the principles of capitalism, and propelled by the forces of demand and supply. Demand is the willingness and ability of buyers to purchase a good or service. Supply is the willingness and ability of suppliers to offer goods and services for sale. Market equilibrium is the price at which the quantity demanded and the quantity supplied is equal. Fundamentally, the U.S. economy is a private enterprise system, incorporating four key elements: private property rights, freedom of choice, profits, and competition. Degrees of competition vary from perfect competition, to monopolistic competition, to oligopoly, to monopoly. The basic goals of the U.S. economic system are growth and stability. Performance indicators include aggregate output, standard of living, gross domestic product, and productivity. Growth and stability can be threatened by inflation and unemployment, which the government influences through fiscal and monetary policies. Chapter Objectives 1. Define the nature of U.S. business and identify its main goals. 2. Describe different types of global economic systems according to the means by which they control the factors of production through input and output markets. 3. Show how demand and supply affect resource distribution in the U.S. 4. Identify the elements of private enterprise and explain the various degrees of competition in the U.S. economic system. 5. Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system. 1 REFERENCE OUTLINE Opening Case: Megawatt Laundering and Other Bright Ideas I. The Concept of Business and the Concept of Profit A. Consumer Choice and Demand B. Opportunity and Enterprise C. Quality of Life II. The U.S. Economic System A. Factors of Production 1. Labor 2. Capital 3. Entrepreneurs 4. Physical Resources 5. Information Resources B. Types of Economic Systems 1. Planned Economies 2. Market Economies a. Input and Output Markets b. Capitalism c. Mixed Market Economies d. Socialism III. The Economics of a Market System A. Demand and Supply in a Market Economy B. The Laws of Demand and Supply 1. The Demand and Supply Schedule 2. Demand and Supply Curves 3. Surpluses and Shortages C. Private Enterprise and Competition in a Market Economy D. Degrees of Competition 1. Perfect Competition 2. Monopolistic Competition 3. Oligopoly 4. Monopoly IV. Understanding Economic Performance A. Economic Growth 1. Aggregate Output and Standard of Living 2. Gross Domestic Product (GDP) 3. Productivity B. Economic Stability C. Managing the U.S. Economy 1. Fiscal Policies 2. Monetary Policies 2LECTURE OUTLINE I. The Concept of Business and the Concept of Profit (Use PowerPoint 1.4.) A business is an organization that provides goods and services to earn profits. Profits are the difference between a business revenues and expenses. A. Consumer Choice and Demand In a capitalistic system like that of the United States, consumers have freedom of choice. In turn, businesses must take into account consumer demand in their pursuit of profits. B. Opportunity and Enterprise Unmet consumer demands provide promising opportunities for potential business success. C. Quality of Life New forms of technology, service businesses, and international opportunities keep production, consumption, and employment growing indefinitely, creating a healthy
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