1. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 1 In Pursuit of Prosperity: The Fundamentals of Business and Economics

2. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 2 This Course Will Help Your Career Learn what it takes to run a business Build a business vocabulary Develop workplace skills Learn about various occupations Appreciate business careers today

3. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 3 What is a Business? For-Profit –Money motive Not-for-profit –Social service

4. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 4 Categories of Business Goods-producing Services

5. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 5 What is Economics? Microeconomics Macroeconomics Economic system

6. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 6 Factors of Production Resources Capital Entrepreneurs Knowledge

7. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 7 Types of Economic Systems Free-market system –Capitalism –Mixed capitalism Planned system –Socialism –Communism

8. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 8 Microeconomics The Forces of Supply and Demand

9. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 9 How Does a Free-Market System Work? Supply and demand Competition Government intervention

10. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 10 Understanding Demand Consumer income Consumer preferences Price of substitute goods Price of complementary goods Advertising and promotion spending Expectations about future prices

11. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 11 Demand Curve for Airline Tickets A demand curve is the relationship between the amount of product that buyers will purchase at various prices. Demand curves typically slope downward. When airlines reduce ticket prices, demand for airline tickets rises.

12. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 12 Expected Shifts in Demand Curve Consumer Income Consumer Preferences Price of Substitutes Price of Complementary Goods Advertising-Promotion Consumer Expectations Number of Buyers Variable Shifts Right When: Increases More Favorable Increases Decreases Increases Optimistic Increases Shifts Left When: Decreases Less Favorable Decreases Increases Decreases Pessimistic Decreases

13. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 13 Understanding Supply Goods and services Supply Price

14. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 14 Supply Curve for Airline Tickets A supply curve is the relationship between prices and quantities sellers are willing to offer for sale, regardless of demand. Supply curves typically slope upward. When ticket prices rise, quantity supplied also increases.

15. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 15 Expected Shifts in Supply Curve Costs of Inputs Number of Competitors New Technology Suppliers Expect That Future Sales Prices Variable Shifts Right When: Decreases Production Costs Will Decline Shifts Left When: Increases Production Costs Will Increase

16. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 16 How Demand and Supply Interact High price reduces demand Low price reduces supply Right price balances supply and demand

17. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 17 Macroeconomics Issues for the Entire Economy

18. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 18 Free-Market Competition Pure competition Monopoly Oligopoly Monopolistic competition

19. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 19 Competitive Advantage Price Speed Quality Service Innovation

20. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 20 The Role of Government Promotes competition Regulates industries Deregulates industries Protects rights of stakeholders Contributes to economic stability

21. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 21 Fostering Competition Antitrust legislation Mergers and acquisitions

22. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 22 Regulating and Deregulating Industries Fair competition Business ethics Working conditions Public safety

23. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 23 Protecting Stakeholders Consumer Product Safety Commission (CPSC) Environmental Protection Agency (EPA) Equal Opportunity Employment Commission (EEOC) Federal Communications Commission (FCC) Federal Aviation Administration (FAA) Federal Energy Regulation Commission (FERC)

24. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 24 Protecting Stakeholders Federal Highway Administration (FHA) Federal Trade Commission (FTC) Food and Drug Administration (FDA) Interstate Commerce Commission (ICC) Occupational Safety and Health Administration (OSHA) Securities and Exchange Commission (SEC)

25. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 25 Contributing to Economic Stability Business cycle –Economic expansion –Economic contraction Fiscal policy –Revenue and spending Monetary policy –Interest rates

26. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 26 Monitoring Major Economic Indicators Interest rates Housing starts Unemployment statistics Durable-goods orders

27. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 27 Measuring Price Changes Purchasing power –Inflation –Deflation Consumer Price Index (CPI) Producer Price Index (PPI)

28. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 28 Measuring National Output Gross National Product (GNP) Gross Domestic Product (GDP) Dollar Value YesYes Final Goods and Services YesYes Domestic Businesses NoYesForeign-OwnedBusinesses YesNo Overseas Operations

29. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 29 Ten Economic Performance Indicators Prime interest rate Housing starts Unemployment rate Durable-goods orders Labor productivity rate Balance of trade Inflation rate Consumer price index Gross domestic product Producer price index

30. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 30 History of U.S. Economic Growth Age of Industrialization (1900-1944) Postwar Golden Era (1945-1969) Turbulent Years (1970-1979) Rise of Global Competition (1980-1989) New Economy and Beyond (1990 to Today)

31. © Prentice Hall, 2007Excellence in Business, 3eChapter 1 - 31 Challenges of Globalization Products and servicesProducts and services Managing a small businessManaging a small business Globalization and workforce diversityGlobalization and workforce diversity Ethics and social responsibilityEthics and social responsibility Technology and electronic commerceTechnology and electronic commerce