Introduction to Business © Thomson South-Western ChapterChapter Economic Decisions and Systems Economic Systems and Monopolies Supply and Demand 1

Introduction to Business © Thomson South-Western Chapter 1 Slide 2 LESSON 1-3 LESSON 1-3 Economic Systems Describe the economic system of the United States

Introduction to Business © Thomson South-Western Chapter 1 Slide 3 The Economic System in the US Capitalism or Free Enterprise: Private ownership of resources by individuals, rather than by the government Individuals are free to decide what to produce and buy Gov’t does regulate some things such as monopolies Market Economy Command Economy

Introduction to Business © Thomson South-Western What is a monopoly? Monopoly: When a business has total control of the market for a product or service Chapter 1 Slide 4

Introduction to Business © Thomson South-Western Why is a monopoly bad? Businesses can charge high prices Poor-qualities products are sold Chapter 1 Slide 5 When competition exists, consumers get the best values at the fairest prices.

Introduction to Business © Thomson South-Western Are there monopolies? Yes, but they are regulated by the government Antitrust Laws: Promote competition and avoid monopolies. Also, prevent unfair business practices such as: False advertising Deceptive pricing Misleading labeling Chapter 1 Slide 6

Introduction to Business © Thomson South-Western Are there monopolies? Patents  A limited monopoly  Inventor is granted the exclusive right to make, use, and sell the innovation for a period of time Public Utility  Electricity or water  Infrastructure required to produce and deliver is expensive Chapter 1 Slide 7

Introduction to Business © Thomson South-Western Chapter 1 Slide 8 Regulatory Agencies: Small Business AdministrationSmall Business Administration: is an agency of the federal government to: aid, counsel, assist, and protect the interests of small business concerns.

Introduction to Business © Thomson South-Western Chapter 1 Slide 9 Regulatory Agencies: FCC (FEDERAL COMMUNICATIONS COMMISSION) FDA (FEDERAL DRUG ADMINISTRATION) OSHA (OCCUPATION SAFETY HEALTH ADMINISTRATION)

Introduction to Business © Thomson South-Western Chapter 1 Slide 10 ADVANTAGES OF OPERATING A BUSINESS IN THE U.S. ECONOMIC SYSTEM Private property Freedom of choice Profit Competition Competitive Advantage: “What you have that the other businesses don’t”

Introduction to Business © Thomson South-Western Chapter 1 Slide 11 THE U.S. ECONOMIC SYSTEM Private property Freedom of choice Profit Competition Competitive Advantage: “What you have that the other businesses don’t”

Introduction to Business © Thomson South-Western Chapter 1 Slide 12 DEMAND AND SUPPLY Demand for a matineeSupply for a matinee

Introduction to Business © Thomson South-Western Chapter 1 Slide 13 MARKET PRICE The market price is where supply and demand are equal. Market price for a matinee