1 / 43

Chapter 2

Chapter 2. Theoretical Foundations: Prices, Markets, and Management. Types of Economic Systems. Laissez Faire Capitalism Modern Mixed Economy Democratic Socialism Communism. Laissez Faire Capitalism. Ownership of Resources Markets Government Involvement. Modern Mixed Economy.

Gabriel
Télécharger la présentation

Chapter 2

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. Chapter 2 Theoretical Foundations: Prices, Markets, and Management

  2. Types of Economic Systems • Laissez Faire Capitalism • Modern Mixed Economy • Democratic Socialism • Communism

  3. Laissez Faire Capitalism • Ownership of Resources • Markets • Government Involvement

  4. Modern Mixed Economy • Ownership of Resources • Markets • Government Involvement

  5. Democratic Socialism • Ownership of Resources • Markets • Government Involvement

  6. Communism • Ownership of Resources • Markets • Government Involvement

  7. The Concept of Demand • Demand is a Schedule of the different quantities of a good or service that a consumer is Willing and Able to purchase at each and every possible price

  8. Determinants of Demand • What are some determinants of the demand for a good or service?

  9. Determinants of Demand • Income • Normal Goods and Services • Inferior Goods and Services • Price • Price of Substitute Goods and Services • Price of Complementary Goods and Services • Attitudes and Tastes

  10. An Individual’s Demand for Beer

  11. The Law of Demand • The lower the price, the more of a good or service that will be purchased, the higher the price, the less that will be bought

  12. Market Demand Curve • Summation of all individual demand curves in the market • Law of Demand • Downward Sloping • Determinants of Demand

  13. Supply • Supply is a schedule of the different quantities of a good or service that a seller is ready and willing to sell at each and every possible price

  14. Hypothetical Firm Supply Curve

  15. Factors Affecting Supply • What factors affect the supply of a good or service?

  16. Factors Affecting Supply • Resource Prices • Labor Costs • Taxes • Subsidies • Technology

  17. P firm 1 S firm 1 Q firm 1 Market Supply vs. Firm P • Where do weget “S” curve? • Summation of supply curves for each “firm” in “market” or “industry” S market Q P firm 2 S firm 2 Q firm 2

  18. Marginal Cost • The additional or extra cost incurred in producing one more unit of a good or service MC = TC/ Q

  19. Hypothetical Firm’s Marginal Cost Curve

  20. S Curve for Firm is MC Curve D P1 MC Q1

  21. Price and Quantity Determinationin a Competitive Marketplace Price D S P’ E PE P’ D S QE Quantity

  22. Role of PricesIn a Free Enterprise System (I) • Transmits Information ... • To producers, consumers, resource suppliers, labor • Signals to produce more or less, to enter new markets, produce new products, etc.

  23. Shift in Demand for Shoes D1 S D0 P P1 What happened here? P0 D1 D0 S Q0 Q1 Q

  24. Shift in Supply of Shoes S’ D P S P1 What happened here? P0 D S Q0 Q1 Q

  25. Effect of Price Controls D S P International Market Price Controlled Maximum Price S D QS QD Quantity of Oil

  26. Role of Prices (II) • Provides Incentives ... to consumers, producers, labor and owners of productive resources • Allocate Resources ... alternative ways to provide goods and services • Affect Distribution of Income

  27. Two Goals of Society • Increase Incomes and Living Standards • Fairness and Equity in Income Distribution • Two Goals in Conflict

  28. Conflict Between Goals • Income Distribution Over Time • Poor Vs. Rich or • Impact on Income over Lifetime

  29. Food Distribution in Chicago • How does it happen?

  30. The Invisible Hand of the Marketplace • Adam Smith, 1776 ...“Wealth of Nations” • Individuals pursue their own self interest ... greater good of society is served • Individuals moved by an “Invisible Hand” to promote social welfare • Example: Food distribution

  31. Environmental Analysis and Forecasting

  32. Environmental Scanning • Analyzing and Forecasting Environmental Change • Describing the Current Environment • Projecting Future Changes

  33. Step I - Define Areas

  34. Define Areas to Study • Primary Involvement - Exchange relationships or marketplace relationships • Secondary Involvement -Relationships, activities and impacts that are ancillary or consequential to primary involvement

  35. Step II - Delineate Topics • External Topics • Internal Topics

  36. Step III - Determine Time Frame and Forecasting Requirements • Short Range • Long Range • Delphi Technique • Scenario Method

  37. Step IV - Design and Implement Strategy • External/Short-term • External/Long-term • Internal/Short-term • Internal/Long-term

  38. Step V - Analyze Data • Cross Impact Analysis

  39. Step VI - Integrate into the Organization • Short-term • Long-term • Organizational Change • Inform Top Management

  40. Poland Case • Problems of a Socialistic System • Everybody has money • Too much money chasing too few goods • Money becomes worthless • Resort to barter • Long lines for food

  41. Poland Case • Why did they have long lines? • How does food distribution under Communism compare to the system in the USA?

  42. Poland Case • How well can government controls replace the free enterprise system? • What is happening in Poland today?

More Related