1、The U.S. Business Environment1IntroductionWhy have gasoline prices gone up and down so dramatically and why do prices change from one day to the next?In general, gas prices fluctuate as a result of four forces: supply, demand, global trends, and uncertainty.After studying this chapter, you should be

2、 able to answer the learning objectives listed on the next slides.Define the nature of U.S. business and identify its main goals and functions.Describe the external environments of business and discuss how these environments affect the success or failure of any organization.Describe the different ty

3、pes of global economic systems according to the means by which they control the factors of production.Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. econom

4、ic system.Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system.The Concept of Business and ProfitBusiness organization that provides goods or services to earn profitsProfits difference between a businesss reven

5、ues and its expensesThe External Environment of BusinessExternal Environment everything outside an organizations boundaries that might affect itDimensions of the External EnvironmentEconomic SystemsEconomic system a nations system for allocating its resources among its citizens, both individuals, an

6、d organizationsFactors of ProductionFactors of productionthe resources that a countrys businesses use to produce goods and servicesTypes of Economic SystemsPlanned Economy economy that relies on a centralized government to control all or most factors of production and to make all or most production

7、and allocation decisionsCommunism, socialismTypes of Economic Systems (cont.)Market economy individual producers and consumers control production and allocation by creating combinations of supply and demandMixed market economy features characteristics of both planned and market economiesPrivatizatio

8、n process of converting government enterprises into privately owned companiesTypes of Economic Systems (cont.)Demand and Supply in a Market EconomyDemand the willingness and ability of buyers to purchase a product (a good or a service) Supply the willingness and ability of producers to offer a good

9、or service for saleDemand and SupplyDemand and Supply (cont.)Private Enterprise and Competitionin a Market EconomyPrivate enterprise systemone that allows individuals to pursue their own interests with minimal government restrictionprivate property rights, freedom of choice, profits, and competition

10、Private Enterprise and Competition in a Market Economy (cont.)Private property rights ownership of the resources used to create wealth is in the hands of individualsFreedom of choiceyou can sell your labor to any employer you chooseProfitsthe lure of profits leads some people to abandon the security

11、 of working for someone else and assume the risks of entrepreneurshipCompetition occurs when two or more businesses vie for the same resources or customersPrivate Enterprise and Competition in a Market Economy (cont.)Degrees of CompetitionDegrees of Competition (cont.)For perfect competition to exis

12、t, two conditions must prevail:all firms in an industry must be small, and the number of firms in the industry must be largePerfect CompetitionThe products of each firm are so similar that buyers view them as identical to those of other firms.Both buyers and sellers know the prices that others are p

13、aying and receiving in the marketplace.Because each firm is small, it is easy for firms to enter or leave the market.Going prices are set exclusively by supply and demand and accepted by both sellers and buyers.Degrees of Competition (cont.)Monopolistic Competition market or industry characterized b

14、y numerous buyers and relatively numerous sellers trying to differentiate their products from those of competitorsOligopoly market or industry characterized by a handful of (generally large) sellers with the power to influence the prices of their productsDegrees of Competition (cont.)Monopoly market

15、 or industry in which there is only one producer that can therefore set the prices of its productsNatural Monopoly industry in which one company can most efficiently supply all needed goods or servicesDegrees of Competition (cont.)Economic IndicatorsEconomic indicatorsstatistics that show whether an

16、 economic system is strengthening, weakening, or remaining stablehelp assess the performance of an economyEconomic Growth, Aggregate Output, and Standard of LivingBusiness cyclethe pattern of short-term ups and downs (or expansions and contractions) in an economy Aggregate output the total quantity

17、of goods and services produced by an economic system during a given periodprimary measure of growth in the business cycleEconomic Growth, Aggregate Output, and Standard of Living (cont.)Standard of living the total quantity and quality of goods and services that they can purchase with the currency u

18、sed in their economic systemGross Domestic ProductGross domestic product (GDP) refers to the total value of all goods and services produced within a given period by a national economy through domestic factors of production measure of aggregate outputGross Domestic Product (cont.)Gross National Produ

19、ctGross national product (GNP)refers to the total value of all goods and services produced by a national economy within a given period regardless of where the factors of production are locatedGDP and GDP per CapitaGross Domestic ProductNominal GDP gross domestic product (GDP) measured in current dol

20、lars or with all components valued at current pricesPurchasing Power Parity the principle that exchange rates are set so that the prices of similar products in different countries are about the sameWorld Prices of a Big MacProductivityProductivity measure of economic growth that compares how much a

21、system produces with the resources needed to produce itProductivity (cont.)Balance of trade the economic value of all the products that a country exports minus the economic value of its imported productsPositive or negative balanceNational Debt the amount of money the government owes its creditorsEc

22、onomic StabilityStability condition in which the amount of money available in an economic system and the quantity of goods and services produced in it are growing at about the same rateInflation occurs when widespread price increases occur throughout an economic systemEconomic Stability (cont.)Unemp

23、loyment the level of joblessness among people actively seeking work in an economic systemRecession a period during which aggregate output, as measured by GDP, declinesDepressiona prolonged and deep recessionManaging the U.S. EconomyFiscal Policies policies used by a government regarding how it collects and spends revenueMonetary Policies policies used by a government to control the size of its money supplyManaging the U.S. Economy (cont.)Stabilization Policy government economic policy intended to smooth out fluctuations in outp