ch- basic economics
Post on 08-Apr-2018
219 Views
Preview:
TRANSCRIPT
-
8/7/2019 ch- Basic Economics
1/29
Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.3-1
Chapter OverviewChapter Overview
Economicssocial science that analyzesthe choices made by people and
governments in allocating scarce resources.
-
8/7/2019 ch- Basic Economics
2/29
Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.3-2
EconomicsEconomics
Microeconomicsstudy of small economicunits, such as individual consumers, families,
and businesses.
Macroeconomicsstudy of a nations
overall economic issues, such as how aneconomy maintains and allocates resources
and how government policies affect the
standards of living of its citizens.
-
8/7/2019 ch- Basic Economics
3/29
Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.3-3
Microeconomics:Microeconomics:
The ForcesofDemand and SupplyThe ForcesofDemand and Supply
Demandwillingness and ability of buyers to
purchase goods and services.
Supplywillingness and ability of sellers to
provide goods and services.
-
8/7/2019 ch- Basic Economics
4/29
Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.3-4
Factors Driving DemandFactors Driving Demand
Each person must chooseBetween saving and spending
How to allocate spending
-
8/7/2019 ch- Basic Economics
5/29
Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.3-5
Factors Driving DemandFactors Driving Demand
Demand Curve
Graph of the amount of a product that
buyers will purchase at different prices
Demand curves typically slope downwardand to the right, meaning that lower prices
attract larger purchases
-
8/7/2019 ch- Basic Economics
6/29
Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.3-6
Demand Curve for Gasoline
-
8/7/2019 ch- Basic Economics
7/29
Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.3-7
Shift in the Demand Curve for Gasoline
-
8/7/2019 ch- Basic Economics
8/29
Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.3-8
Factors Driving SupplyFactors Driving Supply
Businesses must chose how to use theirresources to obtain the best profits
Supply Curve
Shows the relationship between different
prices and the quantities that sellers will
offer for sale, regardless of demand
-
8/7/2019 ch- Basic Economics
9/29
Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.3-9
Supply Curve for Gasoline
-
8/7/2019 ch- Basic Economics
10/29
Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.3-10
Factors Driving SupplyFactors Driving Supply
Central role in determining the overall supplyof goods and services is played by factors of
production
Natural resources
Human resources
Physical facilities
Entrepreneurship
-
8/7/2019 ch- Basic Economics
11/29
Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.3-11
How Demand and Supply InteractHow Demand and Supply Interact
Separate shifts in demand and supply haveobvious effects on product price and
availability
Equilibrium price
-
8/7/2019 ch- Basic Economics
12/29
Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.3-12
Law ofSupply and Demand
-
8/7/2019 ch- Basic Economics
13/29
Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.3-13
Macroeconomics: Issuesfor theMacroeconomics: Issuesfor the
Entire EconomyEntire Economy
Capitalism: The Private Enterprise System
and Competition.
Private enterprise systemeconomicsystem in which business success or
failure depends on how well firms match
and counter the offerings of competitors;
also known as capitalism.
-
8/7/2019 ch- Basic Economics
14/29
Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.3-14
Macroeconomics: Issuesfor theMacroeconomics: Issuesfor the
Entire EconomyEntire Economy
Capitalism: The Private Enterprise System
and Competition
Pure competition
Monopolisticcompetition
Oligopoly
Monopoly
Deregulation
-
8/7/2019 ch- Basic Economics
15/29
Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.3-15
TypesofCompetition
-
8/7/2019 ch- Basic Economics
16/29
Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.3-16
PlannedEconomies:PlannedEconomies:
Communism and SocialismCommunism and Socialism
Communism: planned economic system in
which private property is eliminated, goods
are owned in common, and factors ofproduction and production decisions are
controlled by the state
Socialism: planned economic system
characterized by government ownership andoperation of all major industries
-
8/7/2019 ch- Basic Economics
17/29
-
8/7/2019 ch- Basic Economics
18/29
Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.3-18
-
8/7/2019 ch- Basic Economics
19/29
-
8/7/2019 ch- Basic Economics
20/29
Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.3-20
Four Stagesofthe Business Cycle
-
8/7/2019 ch- Basic Economics
21/29
Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.3-21
Productivity and the Nations GrossProductivity and the Nations Gross
DomesticProductDomesticProduct
Productivityrelationship between the
goods and services produced in a nation
each year and the inputs needed to produce
them.
Grossdomestic productthe sum of all
goods and services produced within a
nations boundaries each year.
-
8/7/2019 ch- Basic Economics
22/29
Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.3-22
PricePrice--Level ChangesLevel Changes
Inflationrising prices caused by acombination of excess consumer demand
and increases in the costs of raw materials,
human resources, and other factors of
production.Hyperinflationeconomic situation
characterized by soaring prices
-
8/7/2019 ch- Basic Economics
23/29
Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.3-23
PricePrice--Level ChangesLevel Changes
Demand-pull inflationExcess consumer demand
Cost-push inflation
Generated by rises in costs of factors ofproduction
Recent Fears about Deflation
-
8/7/2019 ch- Basic Economics
24/29
Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.3-24
MeasuringPrice Level ChangesMeasuringPrice Level Changes
ConsumerPrice Index (CPI)
measures the monthly average change
in prices of goods and services
-
8/7/2019 ch- Basic Economics
25/29
Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.3-25
Employment LevelsEmployment Levels
Unemployment ratean indicator of a
nations economic
health
Top Job Losses byIndustry in the
Recent Recession
-
8/7/2019 ch- Basic Economics
26/29
Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.3-26
FourTypesofUnemployment
-
8/7/2019 ch- Basic Economics
27/29
Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.3-27
Managing the EconomysPerformanceManaging the EconomysPerformance
Monetary Policygovernment actions to
increase or decrease the
money supply and
change bankingrequirements and interest
rates to influence
bankers willingness to
make loans.
-
8/7/2019 ch- Basic Economics
28/29
Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.3-28
Managing the EconomysPerformanceManaging the EconomysPerformance
Fiscal Policy
government spending
and taxation decisions
designed to controlinflations, reduce
unemployment, improve
the general welfare of
citizens, and encourageeconomic growth.
-
8/7/2019 ch- Basic Economics
29/29
top related