NETA PowerPoint Presentations to accompany The Future of Business chapter 1 NETA PowerPoint Presentations to accompany The Future of Business Fourth Edition Adapted by Norm Althouse, University of Calgary Copyright © 2014 by Nelson Education Ltd.

Economics: Evolving Systems chapter 2 Economics: Evolving Systems Chapter 2 Copyright © 2014 by Nelson Education Ltd.

Making the Connection Copyright © 2014 by Nelson Education Ltd. chapter 1 Making the Connection Copyright © 2014 by Nelson Education Ltd.

Learning Outcomes Explain what economics is and how the three sectors of the economy are linked. Understand the primary features of the world’s economic systems. Explain the four types of market structure. Discuss the basic microeconomic concepts of demand and supply, and how they establish prices. Show how economic growth, full employment, and price stability indicate a nation’s economic health. Describe how the Bank of Canada uses monetary policy, and how governments use fiscal policy to achieve their macroeconomic goals. List some of the trends that are reshaping micro- and macroeconomic environments. Copyright © 2014 by Nelson Education Ltd.

Explain what economics is and how the three sectors of the economy are linked. Copyright © 2014 by Nelson Education Ltd.

Basic Terms Economics – The study of how a society uses scarce resources to produce and distribute goods and services. Microeconomics – The sub-area of economics that focuses on individual parts of the economy, such as households or firms. Macroeconomics – The sub-area of economics that focuses on the economy as a whole by looking at aggregate data for large groups of people, companies, or products. Copyright © 2014 by Nelson Education Ltd.

Business and Economies Working Together Copyright © 2014 by Nelson Education Ltd.

Resources Used to Create Products Factors of Production Natural Resources Labour Resources Used to Create Products Capital Knowledge Entrepreneurship Copyright © 2014 by Nelson Education Ltd.

Exhibit 2.1: Economics as a Circular Flow Copyright © 2014 by Nelson Education Ltd.

Understand the primary features of the world’s economic systems. Copyright © 2014 by Nelson Education Ltd.

Economic Systems An economic system is the combination of policies, laws, and choices made by a nation’s governments to establish the systems that determine what goods and services are produced and how they are allocated. Joe Fox/age fotostock Copyright © 2014 by Nelson Education Ltd.

Economic Systems Copyright © 2014 by Nelson Education Ltd.

Economic Systems Copyright © 2014 by Nelson Education Ltd.

Explain the four types of market structure. Copyright © 2014 by Nelson Education Ltd.

Competing in a Free Market Copyright © 2014 by Nelson Education Ltd.

Perfect Competition A large number of small firms are in the market. The firms sell similar products. It is easy to open a new business or close an existing one. Buyers and sellers have good information about prices, supply sources, and so on. Copyright © 2014 by Nelson Education Ltd.

Monopolistic Competition Copyright © 2014 by Nelson Education Ltd.

Oligopoly Copyright © 2014 by Nelson Education Ltd. Images Etc Ltd/Getstock Copyright © 2014 by Nelson Education Ltd.

Pure Monopoly Copyright © 2014 by Nelson Education Ltd.

Discuss the basic microeconomic concepts of demand and supply, and how they establish prices. Copyright © 2014 by Nelson Education Ltd.

Nature of Demand Demand The quantity of a product that people are willing to buy at various prices. Exhibit 2.5: Demand Curve for Snowboarder Jackets Copyright © 2014 by Nelson Education Ltd.

Nature of Supply Supply The quantity of a product that businesses will make available at various prices. Exhibit 2.6: Supply Curve for Snowboarder Jackets Copyright © 2014 by Nelson Education Ltd.

The quantity of a product demanded equals the quantity supplied Equilibrium Equilibrium The quantity of a product demanded equals the quantity supplied Exhibit 2.7: Equilibrium Price and Quantity The number of snowboarder jackets produced and bought at $80 will tend to rest at equilibrium unless there is a shift in either demand or supply. Copyright © 2014 by Nelson Education Ltd.

Changes in Demand and Supply Copyright © 2014 by Nelson Education Ltd.

Show how economic growth, full employment, and price stability indicate a nation’s economic health. Copyright © 2014 by Nelson Education Ltd.

Macroeconomic Main Goals Striving for Economic Growth Full Employment Price Stability Copyright © 2014 by Nelson Education Ltd.

Striving for Economic Growth Drawbacks of Economic Growth Pollution Strain on public facilities/programs GNP: Measures what is produced by a nation regardless of where the factors of production are. GDP: The total market value of final products produced/supplied within a nation’s border. Copyright © 2014 by Nelson Education Ltd.

Business Cycles An increase in business activity results in a rise in: Eventually these all peak and decline. Copyright © 2014 by Nelson Education Ltd.

Keeping People on the Job Copyright © 2014 by Nelson Education Ltd.

Keeping Prices Steady Inflation: Average of all prices is rising. Demand-Pull: Demand for products is greater than supply. Cost-Push: Increases in production costs push up prices. Copyright © 2014 by Nelson Education Ltd.

Consumer Price Index (CPI) Producer Price Index (PPI) Measuring Inflation Consumer Price Index (CPI) Index of prices of a “market basket” of products purchased by consumers. Producer Price Index (PPI) Prices paid by producers for raw materials, partially finished goods, and finished products. Copyright © 2014 by Nelson Education Ltd.

Describe how the Bank of Canada uses monetary policy, and how governments use fiscal policy to achieve their macroeconomic goals. Copyright © 2014 by Nelson Education Ltd.

Achieving Macro Goals Copyright © 2014 by Nelson Education Ltd.

List some of the trends that are reshaping micro- and macroeconomic environments. Copyright © 2014 by Nelson Education Ltd.

The Future of Economics Lack of confidence in the markets. Meeting competitive challenges. Increasing entrepreneurship worldwide. Copyright © 2014 by Nelson Education Ltd.