CHAPTER 1

      Understanding
The Business System

      Presented by: Anna Riana Putriya
The Concept Of Business and
The Concept Of Profit

          • Business is an organization
            that provides goods...
What Are Factors of Production?


              Resources used in the
              production of goods and
              ...
Factors of Production

            1. Labor/Human resources /
               Labor/
               Intelectual Capital are...
3. Entrepreneur is an individual who accepts the
   risks and opportunities involved in creating and
   operating a new bu...
Economic Systems Around the World


  An economic system is a nation’s system for
                             nation’
   ...
Types of Economic Systems

                   Planned
                  Economies


 Communism                           S...
1. Planned Economy

                          Relies on a centralized
                          government to control all ...
2. Market Economy




  Relies on individuals to control production and
     allocation decisions through supply and
     ...
What is Market?
Mechanism for exchange between the buyers and
sellers of a particular good or service




What Is Capitali...
Circular Flow in a Market Economy




                            anna@unimedia.ac.id
3. Mixed Market Economy

Features characteristics of both planned and market
economies

• Privatization is the process of ...
Demand and Supply in a Market Economy


• Demand is the willingness
  and ability of buyers to
  purchase a good or servic...
The Laws of Supply and Demand

          The law of demand:
          Buyers will purchase (demand) more
          of a pr...
What Is the Market Price (or Equilibrium Price)?

               Profit-
               Profit-maximizing price at which t...
Private Enterprise and Competition in a
Market Economy

  Private enterprise is an economic system that allows
  individua...
Degrees of Competition


                        Monopolistic
            Oligopoly   Competition


One                   ...
Degrees of Competition




                         anna@unimedia.ac.id
Evolution in Business


     Production Era       Marketing Era



    Laissez-Faire &
    Laissez-               Global E...
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Business w01 Understanding The Business System @1

  1. 1. CHAPTER 1 Understanding The Business System Presented by: Anna Riana Putriya
  2. 2. The Concept Of Business and The Concept Of Profit • Business is an organization that provides goods or services to earn profits • Profits represent the difference business’ between a business’s revenues and its expenses anna@unimedia.ac.id
  3. 3. What Are Factors of Production? Resources used in the production of goods and services— services—labor, capital, entrepreneurs, physical resources and information resources anna@unimedia.ac.id
  4. 4. Factors of Production 1. Labor/Human resources / Labor/ Intelectual Capital are the physical and mental capabilities of people as they contribute to economic production 2. Capital are the funds needed to create and operate a business enterprise anna@unimedia.ac.id
  5. 5. 3. Entrepreneur is an individual who accepts the risks and opportunities involved in creating and operating a new business venture 4. Physical resources are tangible things organizations use in the conduct of their business 5. Information resources are data and other information used by business Can you name any others ? anna@unimedia.ac.id
  6. 6. Economic Systems Around the World An economic system is a nation’s system for nation’ allocating its resources among its citizens. anna@unimedia.ac.id
  7. 7. Types of Economic Systems Planned Economies Communism Socialism (Mixed Market) Capitalism vs. Market anna@unimedia.ac.id
  8. 8. 1. Planned Economy Relies on a centralized government to control all or most factors of production and to make all or most production and allocation decisions. The Kremlin is shown above. What Is Communism? Planned economy in which the government owns and operates all factors of production anna@unimedia.ac.id
  9. 9. 2. Market Economy Relies on individuals to control production and allocation decisions through supply and demand anna@unimedia.ac.id
  10. 10. What is Market? Mechanism for exchange between the buyers and sellers of a particular good or service What Is Capitalism? Market economy that provides for private ownership of production and encourages entrepreneurship by offering profits as an incentive anna@unimedia.ac.id
  11. 11. Circular Flow in a Market Economy anna@unimedia.ac.id
  12. 12. 3. Mixed Market Economy Features characteristics of both planned and market economies • Privatization is the process of converting government enterprises into privately owned companies • Socialism is a partially planned system in which the government owns and operates selected major industries anna@unimedia.ac.id
  13. 13. Demand and Supply in a Market Economy • Demand is the willingness and ability of buyers to purchase a good or service • Supply is the willingness and ability of producers to offer a good or service for sale anna@unimedia.ac.id
  14. 14. The Laws of Supply and Demand The law of demand: Buyers will purchase (demand) more of a product as its price drops and less as its price increases. The law of supply: Producers will offer (supply) more of a product for sale as its price rises and less as its price drops. anna@unimedia.ac.id
  15. 15. What Is the Market Price (or Equilibrium Price)? Profit- Profit-maximizing price at which the quantity of goods demanded and the quantity of goods supplied are equal High 2500 Surplus D S 2000 Pizza Price 1500 1000 Market Equilibrium 500 0 Shortage 2 4 6 8 10 12 14 16 18 20 Low Quantity High anna@unimedia.ac.id
  16. 16. Private Enterprise and Competition in a Market Economy Private enterprise is an economic system that allows individuals to pursue their own interests without undue governmental restriction. Four elements: – Private Property Rights – Freedom of Choice – Profits – Competition anna@unimedia.ac.id
  17. 17. Degrees of Competition Monopolistic Oligopoly Competition One Many Monopoly Perfect Competition Sellers anna@unimedia.ac.id
  18. 18. Degrees of Competition anna@unimedia.ac.id
  19. 19. Evolution in Business Production Era Marketing Era Laissez-Faire & Laissez- Global Era Entrepreneurship Era Information & Industrial Revolution Internet Era anna@unimedia.ac.id

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