Business: Chapter 2
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The study of how society uses scarce resources to produce and distribute goods and services
The sub area of economics that focuses on individual parts of the economy such as households and firms
The sub area of economics that focuses on the economy as a whole by looking at aggregate data for larger groups of people, companies or products
- What is produced?
- How much is produced?
- How is it produced?
- For who is it produced?
Resources used to create products
- Natural resources
Primary Economic System
- market economies
- command economies
- mixed economics
Factors owned allocated by the marketplace
Factors owned and allocated by the government
Factors owned or controlled by the government in major industries
What is Perfect Competition?
- large number of firms and market
- sell similar product
- buyers and sellers have good information about prices, supply etc.
- easy to open or close businesses
What is Monopolistic Competition?
- many firms in the market
- firms offer products that are close substitute but still different
- easy to enter market
What is Oligopoly?
- a few firm produce most the output
- large capital requirements limit the number of firms
What is Pure Monopoly?
- A single firm accounts for all industry
- a firm is the industry
- prevent new firms from entering
The 4 Markets
- Perfect Competition
- Monopolistic Competition
- Pure Monopoly
The quantity of product that people are willing to buy at various prices
The quantity of product that business will make available for purchase
The quantity of product demands equal the product supplied
Changes in Demand
- changes in customer income
- changes in fashion or taste
- changes in price of related products
- expectations about future prices
- change in the number of buyers
Changes in Supply
- new technology
- change in price of resources
- change in price of related products
- change in number of producers
- change in taxes
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