Docstoc

Understanding the Economy

Document Sample
Understanding the Economy Powered By Docstoc
					Understanding
the Economy


  Chapter 6.2
The Business Cycle
 alternating periods of growth and
  decline in the economy




       expansion
                   contraction
                   (recession)
What impacts Business Cycle?

1. Scarcity
2. Factors of Production
3. Opportunity Cost
4. Supply & Demand
5. Competition & Profit
Scarcity
 the basic economic problem
   unlimited wants and limited resources
Factors of Production
 resources available to business or
  nation
Factors of Production
 Land
   Natural Resources
 Labor
   human capital
   people skills
 Capital
   money and machines
 Entrepreneurship
Opportunity Cost
 what is given up when choice is made
 cost of the next best alternative
   gain benefit from one choice, but
   lose benefit of alternative
Law of Supply and Demand
 demand influences price and supply of:
   Goods
     tangible item that is bought, used and
      discarded
   Services
     intangible product from which the buyer
      derives benefit when purchased
 Supply / Demand / Prices
 high demand          good marketing 
  higher prices         more demand 
  slows demand           higher prices

 more competition     low supply 
  lower prices          increased prices 
  increased demand       slows demand
Supply
 amount
  businesses are
  willing and able
  to produce
  at certain price
Demand
 amount
  individuals are
  willing and able
  to purchase
  at certain price
 influences price
  and supply
Competition & Profit
 Free Market – individuals make own
  economic decisions
   limited government interference
 Pursuit of Profit –keeps economy
  dynamic and growing
   Profit = Revenue – Expenses
 Entrepreneurs – take risk to make
  profit by running a business
 Monopoly – when a company has
  control of a market

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:0
posted:3/16/2013
language:English
pages:14