1. Economics for Leaders Incentives & Innovation

2. Economics for Leaders Incentives, Innovation, & the Role of Institutions

3. Economics for Leaders Review: income of nations

4. Economics for Leaders Butterfingers

5. Economics for Leaders Review: income of nations

6. Economics for Leaders ERP-4: Institutions are the “rules of the game” that influence choices. Laws, customs, moral principles, superstitions, and cultural values influence people’s choices. These basic institutions controlling behavior set out and establish the incentive structure and the basic design of the economic system.

7. Economics for Leaders ~1750 Review: Lesson from history: Economic growth is the answer to poverty. Why? Productivity

8. Economics for Leaders The Secret to Economic Growth: Productivity The output produced from a given set of resources in a given period of time. Increasing productivity means that greater output is produced from a given set of resources in a given period of time.

9. Economics for Leaders Who has greater productivity? Why?

10. Economics for Leaders ERP-3: People respond to incentives in predictable ways.

11. Economics for Leaders What are the incentives to increase productivity? Profits

12. Economics for Leaders Profit Defined Total Revenue -Total Cost = Profit Accountant: total cost = $ cost of production Economist: total cost = opportunity cost (cost of production Plus the next best alternative!)

13. Economics for Leaders Dan makes $75,000 as teacher anticipates $100,000 as sports card dealer Sports card revenues = $140,000 Costs of doing business = $ 70,000 Does Wendy make a profit?

14. Economics for Leaders Revenue - Cost = Profit $140,000 – $70,00 = $70,000 What did Wendy give up? $75,000 plus teaching job.

15. Economics for Leaders Entrepreneur Who responds to the incentive of profit in markets?

16. Economics for Leaders The Entrepreneur is the: Risk taker Undertaker Organizer Innovator Residual Claimant (they get what is left—positive or negative)

17. Economics for Leaders The Entrepreneur gets the owners of labor and resources to cooperate in the production of a good or service and meets the terms of their involvement

18. Economics for Leaders Necessary instiutions for profits to occur: Secure private property rights Stable rule of law Freedom to buy and sell in markets Uncertainty/Risk

19. Economics for Leaders Profits Draw a Crowd... Q o D1D1 Quantity Price P Q1Q1 Q2Q2 P1P1 P2P2 S2S2 S1S1

20. Economics for Leaders The result: Innovation Cost cutting Quality/product improvement

21. Economics for Leaders http://www.livinghistoryfarm.org/farminginthe50s/life_11.html

22. Economics for Leaders http://www.livinghistoryfarm.org/farminginthe50s/machines_plowing.html

23. Economics for Leaders Bottom Line – 40 Acres 4 Horse Team =55.0 hours 1936 Farmall F20=25.0 hours 1956 Farmall 450=16.5 hours 1997 Deere 8100= 1.1 hours

24. Economics for Leaders

25. http://www.youtube.com/watch?v=E Yg-cHe79hI&feature=channel

26. Economics for Leaders http://www.youtub e.com/watch?v=Yw zelMxVkr0

27. Economics for Leaders Innovation: Can be products OR processes

28. Economics for Leaders Top 25 (non-medical) Innovations of the Last 25 years 1.The Internet 2.Cell phone 3.Personal computers 4.Fiber optics 5.E-mail 6.Commercialized GPS 7.Portable computers 8.Memory storage discs 9.Consumer level digital camera 10.Radio frequency ID tags 11.MEMS 12.DNA fingerprinting 13.Air bags 14.ATM 15.Advanced batteries 16. Hybrid car 17.OLEDs 18.Display panels 19.HDTV 20.Space shuttle 21.Nanotechnology 22.Flash memory 23.Voice mail 24.Modern hearing aids 25.Short Range, High Frequency Radio http://www.cnn.com/2005/TECH/01/03/cnn25.top25.innovations/

29. Economics for Leaders Solar-powered light bulb is one Denver inventor's brilliant idea By Jason Blevins The Denver Post

30. Economics for Leaders. In his spartan Capitol Hill office, Katsaros explains how Nokero, the affordable, durable, sun-fueled light, can help the 1.6 billion people worldwide without electricity and wean them from burning dangerous kerosene lamps. "We are so in need of light. Most people use candlelight or kerosene," says Marshall, whose company, Africana SunPower, hopes to introduce solar power to West Africa. "This product takes us out of darkness. With light we could study, we could cook. It will change people's lives. And it's affordable." Already Nokero bulbs are trickling into 33 countries, where tens of millions live without electricity. Bought in bulk, the bulbs cost about $6 each. Retail, they run about $15. "We are running a very, very lean operation to keep retail costs low enough so the 1.2 billion people who live on $2 a day can afford the light," Katsaros says. "So every penny matters.“ A quarter of the world still burns fuel for light. Those burning lamps emit about 190 million tons of carbon dioxide into the atmosphere every year, the equivalent of emissions from 30 million cars or 1.3 million barrels of oil a day,

31. Economics for Leaders http://www.engadget.com/2010/06/09/nokero-debuts-rugged-rainproof-n100- solar-light-bulb-for-develo/

32. Economics for Leaders ERP-4: Institutions are the “rules of the game” that influence choices.

33. Economics for Leaders

34. Ease of Doing Business Most Difficult Niger Liberia Eritrea Venezuela Chad Burundi Congo, Rep. Guinea-Bissau Central African Republic Congo, Dem. Rep. Easiest Singapore New Zealand United States Hong Kong, China Denmark United Kingdom Canada Ireland Australia Source: http://www.doingbusiness.org/economyrankings/http://www.doingbusiness.org/economyrankings/

35. Economics for Leaders 1.They make more goods and services available at lower prices. 2.The presence of other competitors (actual or potential) provides incentives for innovation 3.Markets provides opportunities for the poor as workers. 4.Markets provides opportunities for the poor as entrepreneurs. Open Markets Benefit the Poor

36. Economics for Leaders Solar lightbulb to shine on developing world Here's a bright idea for the planet. A Hong Kong-based company has introduced what it bills as the world's only solar-powered lightbulb with the hope of reaching millions of people with little or no access to electricity. http://www.engadget.com/2010/06/09/nokero-debuts-rugged- rainproof-n100-solar-light-bulb-for-develo/

37. Economics for Leaders http://www.youtube.com/watch?v=Q Gj-KkjwXJY&feature=related