MGMT 1 Midterm: ONE
Document Summary
Ch 2 economics - the study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals. Price is determined by negotiation (both buyer + seller) supply - quantities of products manufacturers or owners are willing to sell at different prices at a specific time. Product differentiation to be successful: oligopoly - degree of competition in which just a few sellers dominate a market (ex: gas) Problem #1: gov doesn"t know what to produce bc prices don"t reflect supply and demand (unlike free markets) so they guess what people need. Problem #2: doesn"t inspire businesspeople to work hard bc no incentives result: shortages result: economic depression. 2 major economic systems free market economy - market determines what goods and services are produced, who gets them, how the economy grows, aka capitalism.
