Date post: | 22-Dec-2014 |
Category: |
Business |
Upload: | novus-business-and-it-training-program |
View: | 440 times |
Download: | 4 times |
Novus Business and IT Training Program
Essential Economic Principles
Objective: To understand the basic economic concepts that govern businesses and how they can influence the behaviors of consumers and suppliers.
2Novus Business and IT Training Program
Economic Basics
• Scarcity – What we want is more than what we have
• Economics – How do we use limited resources?
3Novus Business and IT Training Program
Types of Economies
• Planned
• Market
• Mixed
4Novus Business and IT Training Program
Inputs and Outputs
GOODS and SERVICES(Outputs)
TYPES OF RESOURCES (Inputs)
5Novus Business and IT Training Program
Consumers and Suppliers
• Consumers – those who buy• Suppliers – those who sell• Businesses can be both
• Workers are suppliers
Consumer of flour
Supplier of bread
The Flow of Income
Inputs for Production
Outputs of Production
$$$ Consumer Spending
$$$Salaries, Wages
7Novus Business and IT Training Program
Economic Basics
• Supply and Demand
– The most basic economic concept
– Supply = what is available in the market
– Demand = what consumers want
8Novus Business and IT Training Program
Supply and Demand
Equilibrium
9Novus Business and IT Training Program
What Determines Demand?
• Income• Preferences• Weather• Time of Year• Relative Price• Consumer Expectation
10Novus Business and IT Training Program
What Changes Market Demand?
• Distribution of Wealth
• Community Habits
• Number of Buyers
• Population Growth
11Novus Business and IT Training Program
Supply, Demand and Price
• Higher demand+ same supply = higher equilibrium price
• Lower demand+ same supply = lower equilibrium price
• Higher supply+ same demand = lower equilibrium price
• Lower supply + same demand = higher equilibrium price
12Novus Business and IT Training Program
Higher Demand = Higher Price
Price
P-1
Q-1
Demand Supply
Quantity
P-2
Q-2
Demand Supply
Normal Winter Colder Winter
13Novus Business and IT Training Program
Opportunity Cost
• Relationship between scarcity and choice
• Different than financial cost
• Not having A because you chose B
• Applies to consumers and suppliers
Trade Improves the Quality of Life
• Everyone has different resources, skills, knowledge, etc.
• If people specialize in what they are best at, they can trade with others to make better use of everyone’s resources.
• Example - Time to prepare 1 kg of butter or cheese:
3 Hours
1 Hour
2 Hours
4 Hour
Butter Cheese You
Your Neighbor
15Novus Business and IT Training Program
Summary