1 / 35

Nickels McHugh McHugh

Nickels McHugh McHugh. 2. How Economics Affects Business: The Creation and Distribution of Wealth. Chapter. 2- 2. Economics: Create Wealth. Use Scarce Resources to Produce Goods & Services To Distribute Among Competing Groups/Individuals Micro v. Macro Resource Development.

pmoseley
Download Presentation

Nickels McHugh McHugh

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Nickels McHugh McHugh

  2. 2 How Economics Affects Business: The Creation and Distribution of Wealth Chapter 2-2

  3. Economics: Create Wealth • Use Scarce Resources to Produce Goods & Services To Distribute Among Competing Groups/Individuals • Micro v. Macro • Resource Development

  4. Four “What’s” ofan Economic System • What is produced? • What amount is produced? • What is the method of output distribution? • What is the rate of economic growth? Adapted from: Edwin Mansfield Economics (New York: W.W. Norton, 1976), p.8

  5. Economic Theories • Thomas Malthus (Early 1800s) • “Dismal Science” • Too many people • Adam Smith (1776) • Freedom is vital • “Invisible Hand”

  6. Three Economic Systems Mixed Socialism (Highly Controlled) (Little Control) Communism Capitalism

  7. Free-Market Capitalism • Private Property • Profit/Ownership • Freedom of Competition • Freedom of Choice

  8. Supply Curve High Price(P) S High Low Quantity(S)

  9. Demand Curve High Price(P) D Low Quantity(D) High

  10. Equilibrium Point Surplus High Market Equilibrium Price S D Shortage Low Quantity High

  11. Free-Market Competition Monopolistic Competition Oligopoly One Many Perfect Competition Monopoly Sellers

  12. Perfect Competition Sellers Buyer

  13. Monopolistic Competition:Many Sellers With Perceived Differences • Fast Food • Colleges

  14. Oligopoly: Few Sellers • Automobiles • Tobacco

  15. Monopoly: One Seller • Diamonds • Utilities • Microsoft?

  16. Limits of Free-Markets • Inequality of Wealth- Causes National & World Tension • Greed Compromises Ethics • Potential Environmental Damage • Limitations Push Country towards Socialism = Government Regulation

  17. Number of Workers per Social Security Recipient Source: Investors.com

  18. Socialism • Private & Public Ownership • Some Choices are Limited • Creates Social Equality • Reduces Individual Incentive- Brain Drain

  19. IndustrializedNations’ Tax Rate Source:Parade Magazine, Apr. 12, 1998.

  20. Communism • Public Ownership • Productive Capacity • Capital • Central Planning/Controlled Economy • Managers = Mandatory Party Membership

  21. Mixed Economies • Free-Market Economy = Capitalism • Command Economy • Socialism • Communism • Trend Results in Blend/Mix • Capitalism > Socialism • Socialism > Capitalism

  22. Why is the U.S.an Economic Success? Major ReasonPercent* Constitution 85 Free Elections 84 Free Enterprise System 81 Abundant Resources 78 Cultural Diversity 71 * Respondents could choose more than one. Source: Investors Business Daily Survey

  23. U.S. Economy • Key Economic Indicators • Productivity • Business Cycles • Recession • Depression • Recovery • Stabilization • Fiscal Policy • Monetary Policy • National Debt

  24. Key Economic Indicators • Gross Domestic Product (GDP) • Unemployment Rate • Price Indexes • Consumer Price Index(CPI) • Producer Price Index(PPI)

  25. U.S. GrossDomestic Product In Billions of U.S. $ Source: U.S. Dept. of Commerce, Bureau of Economic Analysis

  26. Share of World GDP(%) 19702001 North America 37 38 Asia 21 28 Europe 33 28 South America 7 4 Africa /Australia 2 2 Source: Investor’s Business Daily, Apr. 29, 2003.

  27. U.S. Unemployment(%) Source: U.S. Bureau of Labor Statistics

  28. What Makes Up TheConsumer Price Index? SOURCE: U.S. Bureau of Labor Statistics

  29. Consumer Price Index 1982-84 = 100 Source: U.S. Dept. of Labor, Bureau of Labor Statistics

  30. % Change in Labor Productivity- U.S. Source: U.S. Dept. of Commerce, Bureau of Labor Statistics

  31. Where Does theGovernment Get Its Money? Source: Office of Management & Budget, 2002

  32. What Federal Dollars Buy (2002) Human Resources. – 63% Interest 7.9% Other 5.7% Defense - 17.5% Physical Resources 5.9% Source: Office of Management & Budget

  33. What $1 Billion Can Buy • An Egg McMuffin and large coffee for the President & his 2,000 Secret Service agents every morning for 575 years. • Average annual grocery bill for 250,000 families of 4. • One year’s food for 5 million cats & dogs. • Tuition, room and board for freshman classes at Brown, Cornell, Harvard, Pennsylvania & Yale with $50M leftover for books.

  34. What is the National Debt? • The debt has reached $6.7 trillion+ • If $1,000 bills were stacked: • $1 Million = 4.29 Inches • $1 Billion = 357.5 Feet • $1 Trillion = 67 Miles • The debt is equal to 442.2 miles in $1,000 bills • National Debt Clock- http://www.brillig.com/debt_clock/

  35. State Budget Deficits(’03 & ’04) Billions • California $ 35.0 • New York 12.0 • New Jersey 5.7 • Connecticut 2.5 • Missouri 1.3 • Ohio 0.72 • Nevada 0.64 Source: BusinessWeek March 17, 2003

More Related