1. The Dynamics of Business and Economics
Chapter One
The Dynamics of Business and Economics

2. The Nature of Business To create profits by:
Selling products – Cars, food, clothing
Providing services – Healthcare, insurance

3. Business vs. Nonprofit Organization
An individual or organization that tries to earn a profit by providing products that satisfy people’s needs, ex. IBM, Coca-Cola.
Nonprofit Organization
Provides products, especially services, for some purpose other than profits, ex. The Salvation Army, 4300 American colleges & universities.

4. The Goals of Business For-Profit Sector: Nonprofit Sector:
PROFIT – the difference between what it costs to make and sell a product and what the customer pays for it.
Nonprofit Sector:
GOALS – may provide goods or services but not for the purpose of earning profits.

5. The People and Activities of Business
Owners
Employees
Customers
Other stakeholders:
Investors
Regulatory Agencies
Activities:
Management
Marketing
Finance

6. Management Hiring Issues
Issues Considered by Job Seekers Before Switching Jobs
Salary
32%
Location
25%
Opportunity for Growth
24%
Chance to learn new technology
15%
Perks 2%
Personal contacts 2%
Source: Survey of 970 job seekers by CareerEngine.com, New York in
Kemba J. Dunham, “The Jungle,” Wall Street Journal, July 3, 2001, p. B6.

7. Why Study Business? It provides employment for most people.
It provides the majority of products needed to survive and enjoy life.
It will help prepare you for your future career.
It will help you become a better informed consumer and member of society.

8. Education Pays Average Annual Salary By Education Level
$63,229
$40,478
$22,895
$16,124
Advanced
Degree
Bachelor’s
Degree
High School
Diploma No
Diploma

9. Types of Resources Used by Business
Natural
land, forests, etc. (not made by people)
Human
physical/mental abilities used by people to produce goods and services
Financial
funds necessary to acquire needed natural and human resources

10. What Is An Economic System?
The way a society distributes its resources to produce goods and services.
Addresses the issue of how to fulfill unlimited demand with limited supply of resources.

11. Basic Questions to Be Asked of Economic Systems
1. What goods and services and what quantity will satisfy the needs of the consumer?
2. How will the goods and services be produced? Who will produce them and with what resources?
3. How are the goods and services to be distributed to the consumer?

12. Types of Economic Systems
Communism
Socialism
Capitalism

13. Comparison of Communism, Socialism, and Capitalism

14. Comparison of Communism, Socialism, and Capitalism

15. Economic Systems and Where They Occur
Communism: Socialism: Capitalism:
China Sweden United States
North Korea India Canada
Cuba France Australia
Viet Nam Israel Japan

16. Mixed Economies Most countries of the world have elements of more than one economic system.

17. The Free-Enterprise System
Individuals can own property and pass it on to their heirs.
People and businesses can earn profits and use them as they wish.
Individuals and businesses can determine how their businesses operate.
Individuals can choose their career, where to live, and what to buy.

18. Supply and Demand Demand: Supply:
The number of products business is willing to sell at different prices at a specific time.
An upward sloping curve on a graph.
Demand:
The number of goods and services that customers are willing to buy at different prices at a specific time.
A downward sloping curve on a graph.

19. Equilibrium Price of Handmade Rugs
Prices of Rugs
(dollars)
$800
Equilibrium
Price
$650
$500
$350
$200 1 2 3 4 5 6 7
Handmade Rugs

20. Four Competitive Environments
Pure Competition Many small businesses sell one standardized product.
Monopolistic There are fewer businesses than in a competition pure-competition system, and the differences between the goods they sell are small.
Oligopoly Very few businesses sell a product; the product they sell can be similar or different.
Monopoly There is only one producer of a product in a given market.

21. Economic Cycles
Economy
Contraction
Expansion
Time

22. Growth of The American Economy
The Early
Economy
The Industrial
Revolution
The Manufacturing and Marketing Economies
The Service & Internet-based Economy

23. Explore Your Career Options
What are some of the changes in the work environment that contribute to the transformation of the traditional career track?
FAST FACT:
Enterprise Leasing is one of the nation’s largest
employers of college graduates, hiring over
5000 graduates a year.

24. Additional Discussion Questions and Exercises
1. Which economic system provides for central government planning to determine what goods and services will satisfy needs of citizens?
2. How did the Industrial Revolution affect the agricultural economy in the United States?
3. What characteristics of modern American entrepreneurs are similar to those of early American entrepreneurs?

25. Chapter 1 Quiz
1. The activities designed to provide goods and services that satisfy customers are knowm as: a. management. b. marketing. c. finance. d. gross national product.
2. Which of the following best describes inflation? a. a continuing decrease in product prices b. a moderate decrease in demand c. a continuing increase in unemployment d. a continuing increase in prices

26. Chapter 1 Quiz
3. The airline business in the United States is an example of what form of competition? a. pure competition b. monopolistic competition c. oligopoly d. monopoly
4. The quantity of products and services that consumers are willing to buy at different prices at a specific time is a. supply. b. demand. c. competition. d. gross national product.