PDF - Week 01 Understanding the Business System @1

8/14/2019 PDF - Week 01 Understanding the Business System @1

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Presented by: Anna Riana Putriya

CHAPTER 1CHAPTER 1CHAPTER 1CHAPTER 1

UnderstandingUnderstandingUnderstandingUnderstandingUnderstandingUnderstandingUnderstandingUnderstanding

The Business SystemThe Business SystemThe Business SystemThe Business SystemThe Business SystemThe Business SystemThe Business SystemThe Business System


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The Concept Of Business andThe Concept Of Business andThe Concept Of Business andThe Concept Of Business and

The Concept Of ProfitThe Concept Of ProfitThe Concept Of ProfitThe Concept Of Profit

BusinessBusinessBusinessBusiness is an organizationis an organizationis an organizationis an organizationthat provides goods or services tothat provides goods or services tothat provides goods or services tothat provides goods or services toearn profitsearn profitsearn profitsearn profits

ProfitsProfitsProfitsProfits represent the differencerepresent the differencerepresent the differencerepresent the differencebetween a businessbetween a businessbetween a businessbetween a businesss revenuess revenuess revenuess revenues

and its expensesand its expensesand its expensesand its expenses


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What Are Factors of Production?What Are Factors of Production?What Are Factors of Production?What Are Factors of Production?

Resources used in theResources used in theResources used in theResources used in the

production of goods andproduction of goods andproduction of goods andproduction of goods andservicesservicesservicesserviceslabor, capital,labor, capital,labor, capital,labor, capital,entrepreneurs, physicalentrepreneurs, physicalentrepreneurs, physicalentrepreneurs, physical

resources and informationresources and informationresources and informationresources and informationresourcesresourcesresourcesresources


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Factors of ProductionFactors of ProductionFactors of ProductionFactors of Production

1.1.1.1. LaborLaborLaborLabor////Human resourcesHuman resourcesHuman resourcesHuman resources ////Intelectual CapitalIntelectual CapitalIntelectual CapitalIntelectual Capital are theare theare theare thephysical and mentalphysical and mentalphysical and mentalphysical and mentalcapabilities of people as theycapabilities of people as theycapabilities of people as theycapabilities of people as theycontribute to economiccontribute to economiccontribute to economiccontribute to economic

productionproductionproductionproduction

2.2.2.2. CapitalCapitalCapitalCapital are the funds needed toare the funds needed toare the funds needed toare the funds needed tocreate and operate a businesscreate and operate a businesscreate and operate a businesscreate and operate a businessenterpriseenterpriseenterpriseenterprise


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Economic Systems Around theEconomic Systems Around theEconomic Systems Around theEconomic Systems Around the WorldWorldWorldWorld

AnAnAnAn economic systemeconomic systemeconomic systemeconomic systemis a nationis a nationis a nationis a nations system fors system fors system fors system forallocating its resources among its citizens.allocating its resources among its citizens.allocating its resources among its citizens.allocating its resources among its citizens.


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Types of Economic SystemsTypes of Economic SystemsTypes of Economic SystemsTypes of Economic Systems

CommunismCommunismCommunismCommunismCommunismCommunismCommunismCommunism SocialismSocialismSocialismSocialismSocialismSocialismSocialismSocialism(Mixed(Mixed(Mixed(Mixed(Mixed(Mixed(Mixed(Mixed Market)Market)Market)Market)Market)Market)Market)Market)

PlannedPlannedPlannedPlannedPlannedPlannedPlannedPlanned

EconomiesEconomiesEconomiesEconomiesEconomiesEconomiesEconomiesEconomies

Capitalism vs. MarketCapitalism vs. MarketCapitalism vs. MarketCapitalism vs. MarketCapitalism vs. MarketCapitalism vs. MarketCapitalism vs. MarketCapitalism vs. Market


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Relies on a centralizedRelies on a centralizedRelies on a centralizedRelies on a centralizedgovernment to control all orgovernment to control all orgovernment to control all orgovernment to control all or

most factors of production andmost factors of production andmost factors of production andmost factors of production andto make all or most productionto make all or most productionto make all or most productionto make all or most productionand allocation decisions. Theand allocation decisions. Theand allocation decisions. Theand allocation decisions. TheKremlin is shown above.Kremlin is shown above.Kremlin is shown above.Kremlin is shown above.

1.1.1.1. Planned EconomyPlanned EconomyPlanned EconomyPlanned Economy

What Is Communism?What Is Communism?What Is Communism?What Is Communism?

Planned economy in which the government owns andPlanned economy in which the government owns andPlanned economy in which the government owns andPlanned economy in which the government owns andoperates all factors of productionoperates all factors of productionoperates all factors of productionoperates all factors of production


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Relies on individuals to control production andRelies on individuals to control production andRelies on individuals to control production andRelies on individuals to control production andallocation decisions through supply andallocation decisions through supply andallocation decisions through supply andallocation decisions through supply anddemanddemanddemanddemand

2.2.2.2. Market EconomyMarket EconomyMarket EconomyMarket Economy


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WhatWhatWhatWhat isisisis MarketMarketMarketMarket????

Mechanism for exchange between the buyers andMechanism for exchange between the buyers andMechanism for exchange between the buyers andMechanism for exchange between the buyers andsellers of a particular good or servicesellers of a particular good or servicesellers of a particular good or servicesellers of a particular good or service

What Is Capitalism?What Is Capitalism?What Is Capitalism?What Is Capitalism?Market economy that provides for private ownership ofMarket economy that provides for private ownership ofMarket economy that provides for private ownership ofMarket economy that provides for private ownership of

production and encourages entrepreneurship by offeringproduction and encourages entrepreneurship by offeringproduction and encourages entrepreneurship by offeringproduction and encourages entrepreneurship by offering

profits as an incentiveprofits as an incentiveprofits as an incentiveprofits as an incentive


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Circular Flow in a Market EconomyCircular Flow in a Market EconomyCircular Flow in a Market EconomyCircular Flow in a Market Economy


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3.3.3.3. Mixed Market EconomyMixed Market EconomyMixed Market EconomyMixed Market Economy

Features characteristics of both planned and marketFeatures characteristics of both planned and marketFeatures characteristics of both planned and marketFeatures characteristics of both planned and marketeconomieseconomieseconomieseconomies

PrivatizationPrivatizationPrivatizationPrivatization is the process of convertingis the process of convertingis the process of convertingis the process of convertinggovernment enterprises into privatelygovernment enterprises into privatelygovernment enterprises into privatelygovernment enterprises into privately

owned companiesowned companiesowned companiesowned companies

SocialismSocialismSocialismSocialism is a partially planned systemis a partially planned systemis a partially planned systemis a partially planned system

in which the government owns andin which the government owns andin which the government owns andin which the government owns andoperatesoperatesoperatesoperates selectedselectedselectedselectedmajor industriesmajor industriesmajor industriesmajor industries


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Demand and Supply in a Market EconomyDemand and Supply in a Market EconomyDemand and Supply in a Market EconomyDemand and Supply in a Market Economy

DemandDemandDemandDemand is the willingnessis the willingnessis the willingnessis the willingness

and ability of buyers toand ability of buyers toand ability of buyers toand ability of buyers topurchase a good or servicepurchase a good or servicepurchase a good or servicepurchase a good or service

SupplySupplySupplySupply is the willingnessis the willingnessis the willingnessis the willingnessand ability of producers toand ability of producers toand ability of producers toand ability of producers tooffer a good or service for saleoffer a good or service for saleoffer a good or service for saleoffer a good or service for sale


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The Laws of Supply and DemandThe Laws of Supply and DemandThe Laws of Supply and DemandThe Laws of Supply and Demand

The law of demand:The law of demand:The law of demand:The law of demand:Buyers will purchase (Buyers will purchase (Buyers will purchase (Buyers will purchase (demanddemanddemanddemand) more) more) more) more

of a product as its price drops and lessof a product as its price drops and lessof a product as its price drops and lessof a product as its price drops and lessas its price increases.as its price increases.as its price increases.as its price increases.

The law of supply:The law of supply:The law of supply:The law of supply:

Producers will offer (Producers will offer (Producers will offer (Producers will offer (supplysupplysupplysupply) more of) more of) more of) more of

a product for sale as its price risesa product for sale as its price risesa product for sale as its price risesa product for sale as its price risesand less as its price drops.and less as its price drops.and less as its price drops.and less as its price drops.


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What Is the Market Price (or Equilibrium Price)?What Is the Market Price (or Equilibrium Price)?What Is the Market Price (or Equilibrium Price)?What Is the Market Price (or Equilibrium Price)?

ProfitProfitProfitProfit----maximizing price at which the quantity of goodsmaximizing price at which the quantity of goodsmaximizing price at which the quantity of goodsmaximizing price at which the quantity of goodsdemanded and the quantity of goods supplied aredemanded and the quantity of goods supplied aredemanded and the quantity of goods supplied aredemanded and the quantity of goods supplied are equalequalequalequal

0

500

1000

1500

2000

2500

2 4 6 8 10 12 14 16 18 20

Quantity

Pizza

Price

HighHighHighHigh

HighHighHighHighLowLowLowLow

SSSSSSSSDDDDDDDD

MarketMarketMarketMarket EquilibriumEquilibriumEquilibriumEquilibrium

SurplusSurplusSurplusSurplus

ShortageShortageShortageShortage

P iv t E t i d C titi iP iv t E t i d C titi iP iv t E t i d C titi iP iv t E t i d C titi i


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Private Enterprise and Competition in aPrivate Enterprise and Competition in aPrivate Enterprise and Competition in aPrivate Enterprise and Competition in aMarket EconomyMarket EconomyMarket EconomyMarket Economy

Private enterprisePrivate enterprisePrivate enterprisePrivate enterprise is an economic system that allowsis an economic system that allowsis an economic system that allowsis an economic system that allows

individuals to pursue their own interests withoutindividuals to pursue their own interests withoutindividuals to pursue their own interests withoutindividuals to pursue their own interests withoutundue governmental restriction.undue governmental restriction.undue governmental restriction.undue governmental restriction.

Four elements:Four elements:Four elements:Four elements:

Private Property RightsPrivate Property RightsPrivate Property RightsPrivate Property Rights Freedom of ChoiceFreedom of ChoiceFreedom of ChoiceFreedom of Choice

ProfitsProfitsProfitsProfits

CompetitionCompetitionCompetitionCompetition


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Degrees of CompetitionDegrees of CompetitionDegrees of CompetitionDegrees of Competition


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Evolution in BusinessEvolution in BusinessEvolution in BusinessEvolution in Business

Industrial RevolutionIndustrial RevolutionIndustrial RevolutionIndustrial Revolution

LaissezLaissezLaissezLaissez----FaireFaireFaireFaire&&&&Entrepreneurship EraEntrepreneurship EraEntrepreneurship EraEntrepreneurship Era

Production EraProduction EraProduction EraProduction Era Marketing EraMarketing EraMarketing EraMarketing Era

Global EraGlobal EraGlobal EraGlobal Era

Information &Information &Information &Information &Internet EraInternet EraInternet EraInternet Era

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