What qualities Employers look for when hiring new employees……. 20. Sense of humor 19. Entrepreneurial skills 18. GPA 17. Creativity 16. Polite 15. Tact 14. Friendly 13. self-confidence 12. Organizational skills 11. Leadership skills

10. Detail-oriented 9. computer- skills 8. Flexibility 7. Analytical skills 6. Teamwork 5. Strong work ethic 4. Motivated 3. Interpersonal skills 2. Honesty and integrity #1 reason employer hire new employees………. Communication skills

The Role of Prices

Prices In the Free Market Prices serve a vital role in a free market economy. How? 1. Solve the problems of excess supply and demand 2. Serve as a tool for distributing goods and resources 3. Most efficient way to distribute resources

Advantages of Prices A. Prices provide a language - Can you conceive of a market-place w/out prices? - Would we be forced to barter? - supplier would have no consistent and accurate way to measure demand B. Price As Incentive - buyer & sellers look at prices to find information on a good’s demand and supply - prices communicate to both whether goods are in short supply or readily available

C. Prices As Signals - Think of prices as a traffic light - Producer: high price = green light, low price = red - Consumer: opposite effect D. Flexibility - prices can be increased to solve a problem of excess demand or decreased to eliminate excess supply For instance:  Supply shock: sudden shortage of a good (Ex. Gas) What are the options?  Rationing: dividing up goods and services using criteria other than price (expensive and takes time to organize) Answer: raise prices to resolve excess demand

A Wide Choice of Goods One of the benefits of a market-based economy is diversity.  Price allows consumers to choose among similar products  Price allows producers to target a specific audience

Perfect Competition  Market structure in which a large number of firms all produce essentially the same product and sell at the same price.  Simplest of all market structures Four Conditions for Perfect Competition: 1) Many buyers and sellers 2) Sellers offer identical products 3) Buyers and sellers are well informed about products 4) Sellers are able to enter and exit the market freely

1) Many Buyers and Sellers - no one individual can influence quantity or price - buyer and seller must accept market price (be a price taker) 2) Identical Products - supplier does not matter commodity: product that is considered the same regardless of who makes or sells it (Ex. Corn) - buyer will always choose supplier w/the lowest price

3 ) Informed Buyer and Sellers - both buyer and seller have an incentive to gather as much information as possible trade-off: time spent gathering info must be worth the amount of money saved 4) Free Market Entry and Exit - firms must be able enter when they can make $ and leave when they can’t

Barriers To Entry Refers to factors that make it difficult for new firms to enter a market. 1. Start-Up Costs: expenses that a new business must pay before the 1 st product reaches the customer - Ex. Rent, training labor - high start-up costs reduce the # of new firms 2. Technology/Education - some markets require a high-degree of training and education

Price and Output Perfect competition breeds efficiency.  competition keeps prices and production low  firms must use all resources to their best adv.  only the most efficient firms stay in business Current Examples of Perfect Competition. 1. Agricultural markets 2. Foreign Exchange markets 3. Internet Related Industries

Ch. 7, page 151 Define the following: Perfect competition (provide an example) Commodity (provide an example) Barriers to entry Start-up costs (provide an example) Imperfect competition 1. What are the four requirements for a perfectly competitive market? 2. What are the two most common barriers that keep new firms from entering the market? 3. How do start-up costs discourage entrepreneurs from entering the market? 4. One of the primary characteristics of perfectly competitive markets is that they are _____________________. 5. How does competition in the market-place keep both prices and production costs down?