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Foundation of Business and Economics
Foundation of Business and Economics
Foundation of Business
and Economics
Importance of Studying Business
C. Standard of Living
Is a measurement with respect to both quantity
and quality.
2. Why We Study Business ?
The amount of goods and services that an
average family or individual views as
necessary.
A measure of how well a person or family is
doing in terms of satisfying needs and
wants with goods and services
I)Minimal amount of government
interference &
II) A free market business system
2. Why We Study Business ?
Free Enterprise:
A system in which private businesses are able
to start and do business competitively to earn
profits, with a minimal degree of government
regulation.
D. Coping with the Change
Price change
Need Change
A. Owners
People who own a business, as well as those
who invest money in one and have right on the
business property, do so because they expect
to earn profit
3. People Form The Core Of Business
B. Managers
The person responsible for operating the business
may be the owner (an owner-manager also called
an entrepreneur) or a professional manager
employed by the owner
C. Employees
Employees supply the skills and abilities
needed to provide a product or service and to
earn a profit
D. Consumers
A person or business who purchases a good or
service for personal or organizational use.
3. People Form The Core Of Business
Stakeholders
D. Social responsibility
Businesses, like each person in society, must accept
their responsibilities in areas such as pollution
control, eliminating discriminatory practices, and
energy conservation.
5. DEFINE ECONOMICS
5. Economics : The foundation of business
Economics
The study of how a society uses its scarce
resources to produce goods and services and to
distribute them for consumption.
At least three issues are key to understanding
economics :
(1) Resources
(2) Goods & Services
(3) Allocation of both resources and products
5. Economics : The foundation of business
1. Resources
a. Natural Resources
Natural Resources are those resources provided
in limited amounts by nature, such as oil, coal,
water and timber etc.
Natural resources must be processed to become
a product or to be used to produce other goods or
services.
b. Capital Resources
Capital Resources are goods produced for the
purpose of making other types of goods and
services.
5. Economics : The foundation of business
1. Resources (continued)
1. Resources (continued)
c. Labor resources
Labor resources represent the human talent, skills
and competence, available in a nation doctors,
operators, teachers and so on.
Needs Wants
Food, clothing, shelter, Fashionable clothes,
medical care, etc. luxury vacations,
Camcorder etc.
C. Allocation
The process of choosing how resources will be
used to meet a societys needs and wants.
5. Economics : The foundation of business
C. Allocation
a. Resource allocation
We must make choices about how the scarce resources are
to be used. To make these choices, we have to answer three
fundamental economic questions:
C. Allocation
b. Product distribution
Besides scarce resource, the issue of allocation involves the
distribution of goods and services to the consumer.
Capitalism or Communism or
Mixed Planned Economy
Free-Market System
Right to ownership Freedom to start a Planned system
business
Entitled to all profits State owns
Both state and industries
Right to choose job
private owned
Profits not
Decide what to industries
recognized
produce
Profits mostly in
State decides
How to produce private sector
occupation
Whom to sell to
6. ECONOMIC SYSTEMS
Economic Systems (continued)
A. Communism/ Planned Economy
An economy in which the government owns the
productive resources, financial enterprises, retail
stores and banks
B. Capitalism/ Free Market Private enterprise
can produce almost everything
C. Mixed Economy both private and government
produce and distribute goods and services
End of Chapter One