1. Chapter 1 Understanding the US Business System
Reference: Ebert & Griffin (2007). "Business Essentials" Pearson, Prentice Hall

2. Economic Systems around the World
Different countries run their businesses in different ways. This is because the economic systems (النظم الاقتصادية) in countries are different.
A country’s economic system decides how the country’s resources(الموارد) are divided among its citizens (people).
Reference: Ebert & Griffin (2007). "Business Essentials" Pearson, Prentice Hall

3. Factors of Production Resources a country use to produce goods & services
There are 5 basic Resources:
Labor: The people who work in businesses also called human resources (الموارد).
Capital: The money needed to start and operate a business.
Entrepreneurs: People who start new businesses.
Physical Resources: These are the tangible (ملموس) things businesses need to operate (the things we can see and touch).
Information Resources: Information and data used by businesses.

4. How Are Factors of Production Allocated
Economic systems: how the country’s
resources are divided among its citizens (المواطنون) / how the factors of production (عوامل الإنتاج)are managed.
There are three types:
Planned economies (sometimes called command economies)
Market economies
Mixed economies
Reference: Ebert & Griffin (2007). "Business Essentials" Pearson, Prentice Hall

5. PLANNED ECONOMIES
Planned Economies (sometimes called Command Economies) – these are controlled by the government of the country – the government makes all or most decisions on what goods to produce and where they will be sold (North Korea, Cuba, North Vietnam)
Communism and socialism are the two basic forms of planned economies`
(4th Page 7; 5th Page 8)
Reference: Ebert & Griffin (2007). "Business Essentials" Pearson, Prentice Hall

6. PLANNED ECONOMIES SOCIALISM / COMMUNISM
In the socialist or communist economic systems, the government of the country owns and operates (تمتلك وتدير) some major industries (الصناعات الرئيسية) and private individuals own and operate other less important industries
The government may own and operate banking, communication, and transportation while individuals own and operate clothing stores, restaurants, garages, etc.
The main idea of socialism/communism is to have an equal distribution of wealth (الثروة)in society – a decent lifestyle for all citizens
Reference: Ebert & Griffin (2007). "Business Essentials" Pearson, Prentice Hall

7. MARKET ECONOMIES
Market Economies – a way for buyers and sellers to exchange goods or services in which both have freedom of choice (حرية الاختيار)
The buyer has freedom to pay the amount of money he or she wishes
The seller has freedom to charge the amount of money he or she wishes for a product or service
Reference: Ebert & Griffin (2007). "Business Essentials" Pearson, Prentice Hall

8. MARKET ECONOMIES - CAPITALISM
A free-market economy is called capitalism
Capitalism allows private ownership (الملكية الخاصة) of the factors of production
Capitalism encourages entrepreneurs (وتشجع منظمى الاعمال) to start small businesses
Capitalism follows the rules of “supply and demand” of products and services
In capitalist economics, there is inequality (عدم المساواة) of wealth in society – there are both very rich and very poor people.
Reference: Ebert & Griffin (2007). "Business Essentials" Pearson, Prentice Hall

9. 3 - MIXED MARKET ECONOMIES
The economies of many countries have some of the features of a planned economy and some of the features of a market economy
Individuals may own and operate businesses
The government owns and operates “essential (الأساسية) services” such as health care, the electricity company, and the postal service – as it is in Bahrain
Reference: Ebert & Griffin (2007). "Business Essentials" Pearson, Prentice Hall

10. PRIVATIZATION
In some countries, “essential services” such as the electricity company have gone through a process called “privatization”
Privatization allows a government service to be purchased and operated by a private company (e.g. Telecommunications in Bahrain)
Reference: Ebert & Griffin (2007). "Business Essentials" Pearson, Prentice Hall

11. Economic Systems Planned Economies Market Economies
*government controlled economies.
*Free market Economies.
Mixed Market
Economies.
Input &output
Market
communism
Socialism
Capitalism
*Government control
all or most factors
of production.
*Government own and
Operate some
major industries.
*Private Individuals own
and operate other
less important industries.
*Free market economy
follows the rules of
supply and demand.
*Individuals have
access or ownership
of factors of production.
*Not “Pure” planned
or “pure” market economies.
*Government own and
operates essential services.
*most countries have
this kind of economy.
*Only government
owned and Operated
enterprises.
*Government control
is limited, most
enterprises are private.
Businesses and consumers
Connected in circular flow.
Privatization
The process of selling
essential government
enterprises to the
private sector.
**Factors of production:
1-Labour.
2-Capital.
3-Entrepreneurs.
4-Physical resources.
5-Information resources.
Reference: Ebert & Griffin (2007). "Business Essentials" Pearson, Prentice Hall

12. Supply and Demand Drive the U.S. Economic System
The willingness and ability of producers to offer a good or service for sale
Law of Supply:
Producers will supply (offer) more of a product for sale as its price rises and less as its price drops.
(price =  supply)
Reference: Ebert & Griffin (2007). "Business Essentials" Pearson, Prentice Hall

13. Supply and Demand Drive the U.S. Economic System (cont’d)
The willingness and ability of buyers to purchase a good or service
Law of Demand:
Buyers will demand (purchase) more of a product as its price drops and less as its price increases.
( Price =  Demand)
Reference: Ebert & Griffin (2007). "Business Essentials" Pearson, Prentice Hall

14. Example: Demand and Supply Schedules
Evaluation of the relationships between level of demand and supply at different price levels.
Quantity of Quantity of Price Pizzas Demanded Pizzas Supplied $ $ $ $ $ $ $ $ $ $      

15. Demand and Supply (1)
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$20 -
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Demand Curve
Demand curve: is graph that shows how many units of a product would be demanded (bought) at different prices.
Price of Pizzas 
Quantity of Pizzas Demanded

16. Demand and Supply (2) 
200 -
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Price of Pizzas
Supply curve: is graph that shows how many units of a product would be supplied (offered for sale) at different prices.
Supply Curve 
Quantity of Pizzas Supplied

17. Demand and Supply  Price of Pizzas Quantity of Pizzas per Week
200 -
400 -
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$20 -
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Price of Pizzas
Demand Curve
Supply Curve
Market Price (Equilibrium price) :Profit maximizing price at which the quantity of goods demanded and the quantity of goods supplied are equal.
Supply = Demand
Equilibrium Price 
Quantity of Pizzas per Week

18. Surplus and Shortage Surplus (الفائض): Shortage (النقص):
When quantity supplied is greater than quantity demanded.
Supply >Demand
Shortage (النقص):
When quantity demanded is greater than quantity supplied.
Supply < Demand
Reference: Ebert & Griffin (2007). "Business Essentials" Pearson, Prentice Hall

19. The U.S. Economy is a Private Enterprise System
Private enterprise-Individuals are free to pursue (متابعة) their own interests without too much government restriction.
To succeed (النجاح) private enterprise needs four element:
Four Key Elements:
Private Property Rights.
Freedom of Choice.
Profits.
Competition.
Reference: Ebert & Griffin (2007). "Business Essentials" Pearson, Prentice Hall

20. Four element of private enterprise
Private Property Rights (حقوق الملكية الخاصة):
Access or ownership of the factors of production must be in the hands of individuals.
Individuals must have the right to buy and sell goods and properties when they wish.
Freedom of choice (حرية الاختيار):
An Individual has the right to work for any employer they choose and to select the products they want to buy.
A producer of goods or service can choose what to produce and whom to hire (توظيف)as employees
Reference: Ebert & Griffin (2007). "Business Essentials" Pearson, Prentice Hall

21. Four element of private enterprise
Profits (الأرباح):
Individuals has the chance make more money working for their company than they would make working for someone else.
Individuals can choose to earn a set salary working for others, or start their own business to try make more money.
Competition (المنافسة):
Many companies offer same or similar products, the customer can choose to buy from any company based on the quality and price of the product.
Reference: Ebert & Griffin (2007). "Business Essentials" Pearson, Prentice Hall

22. Types of Competition
Even in a free enterprise system, not all industries are equally competitive.
There are four degrees of competition:
Perfect Competition.
Monopolistic Competition.
Oligopoly.
Monopoly.
Reference: Ebert & Griffin (2007). "Business Essentials" Pearson, Prentice Hall

23. Perfect competition This is when all firms in the industry are small .
The number of firms in the industry is large.
Therefore, no firm is powerful enough to determine price, as price is set by demand and supply.
Example: Vegetables market:
Products offered are same or similar.
Buyers and sellers know the price.
Easy to enter or leave the market
Prices are set by supply and demand.
Reference: Ebert & Griffin (2007). "Business Essentials" Pearson, Prentice Hall

24. Monopolistic Competition
A fewer seller of products but still many buyers.
Sellers try to make their product different.
Example: fast food restaurants, soft drinks.
Oligopoly
A small number of sellers offer products.
They are large companies they can influence the price.
The price of similar products offered by different companies are generally the same.
Example: Airplanes manufacturers.
Reference: Ebert & Griffin (2007). "Business Essentials" Pearson, Prentice Hall

25. Monopoly
A Monopoly exists when there is only one producer in a market or industry.
A single supplier or producer has complete control over the prices it charges.
The customers want the product, they must pay the price asked.
Example: Electricity supplier.
Reference: Ebert & Griffin (2007). "Business Essentials" Pearson, Prentice Hall

26. Degrees of Competition
Characteristic :
Perfect Competition
Monopolistic Competition
Oligopoly
Monopoly
Example:
Fruit & veg. shop
Cold Store
Airlines
Electricity Provider
No. of Competitors:
Many
Many, but fewer than pure competition
Few
None
Ease of entry into the industry:
Relatively easy
Fairly easy
Difficult
Regulated by Government
Similarity of goods being provided:
Identical
Similar
Can be similar or different
Neither
Level of controls of price by individual firms:
Some
Considerable
Reference: Ebert & Griffin (2007). "Business Essentials" Pearson, Prentice Hall