ib chapter2

ENGLAND

GERMANY

FRANCE

DENMARKSWEDEN

PORTUGAL

2-12-1 Economics and Decision Making

2-22-2 Basics of Economics

2-32-3 Economic Systems

2-42-4 Achieving Economic Development

2-52-5 Resources Satisfy Needs

InternationalBusinessChapter2

Our Global Economy[P.26-55]

InternationalBusinessChapter2

Describe the basic economic problem. List the steps of the decision-making

process.

InternationalBusinessChapter2-1

Scarcity refers to the limited resources available to satisfy the unlimited needs and wants of people.

Economics is the study of how people choose to use limited resources to satisfy their unlimited needs and wants.

InternationalBusinessChapter2-1The Basic Economic Problem

Coping with scarcityMaking choices

InternationalBusinessChapter2-1Making Economic Decisions

Every time we decide how to use the time, money or energy we’re making an

economic decision


What do I need or want.

How can I have that.

What are the advantages or disadvantages in each case.

Based on #3 what is the best option.

Do what have to be done

Did it solve the problem?

InternationalBusinessChapter2-1The Decision-Making Process

Describe how the market sets prices. Explain the causes of inflation.

http://www.slideshare.net/lntrullin/supply-and-demand-1184484

InternationalBusinessChapter2-2Basics of Economics

http://www.slideshare.net/lntrullin/supply-and-demand-1184484

Supply is the relationship between the amount of a good or service that businesses are willing and able to make available and the price.

Demand is the relationship between the amount of a good or service that consumers are willing and able to purchase and the price.

Market price is the point at which supply and demand cross.

InternationalBusinessChapter2-2Price-Setting Activities

Market Price Is Set by Supply and Demand

Amount of Stuffed Animals

Pric

e pe

r an

imal


Amount of Stuffed Animals

Pric

e pe

r an

imal

Product

Price



D S

$100

$80

$60

$40

$20

$10

$00 20 40 80 160 320

Product

Price



DS

$100

$80

$60

$40

$20

$10

$00 20 40 80 160 320

InflationDemand-pull inflationCost-push inflation

InternationalBusinessChapter2-2Changing Prices

Name the three main factors of production. Understand how different countries make economic

decisions.

InternationalBusinessChapter2-3Economic Systems

InternationalBusinessChapter2-3Economic Resources Satisfy Needs

CapitalResources

HumanResources

NaturalResources

ProductionFactors

Also known as land, these resources are the raw materials that come from the earth, from the water, and from the air. Iron, gold, silver, agricultural products, rivers, and oxygen are examples of natural resources.

These items are used in the production of goods and services consumed by individuals, businesses, and governments.


Also known as labor, these resources are the people who work to create goods and services.

While technology has changed or eliminated certain tasks previously performed by people, new types of work are continually being created.


Also called capital, these resources include buildings, money, equipment, and factories used in the production process.

These items are expensive and are used over several years by business organizations.


The economic choices of a country relate to three basic questions:

1.1.What goods and services are to be produced?

2.2.How should the goods and services be produced?

3.3.For whom should the goods and services be produced?


Command Economies Market Economies

Private propertyProfit motiveFree, competitive marketplace

Mixed Economies


Describe the factors that affect economic development.

Identify the different levels of economic development.


TechnologyAgricultural

Dependency

Literacy

DevelopmentFactors

Low literacyLimited

technologyAgricultural or

mining economy

Improving literacy

Improving technology

Decreasing dependence on agriculture or mining

High literacyModern

technologyIndustrial

economy

Less-Developed Country

Developing Country

Industrialized Country

InternationalBusinessChapter2-4Levels of Economic Development

Discuss economic principles that explain the need for international trade.

Identify various measures of economic progress and development.

InternationalBusinessChapter2-5The Economics of Foreign Trade

AbsolutAdvantage

a country can produce a good or service at a lower cost than other countries

ComparativeAdvantage

exists when a country can produce a good or service with more efficiency than other countries.

InternationalBusinessChapter2-5The Economics of Foreign Trade

Measure of ProductionGross domestic product (GDP)Gross national product (GNP)

InternationalBusinessChapter2-5Measuring Economic Progress

Measures the output of goods produce in the country

Measures the total value of all goods and services produced by the resources of a country

International Trade ActivityBalance of tradeForeign exchange rateForeign debt


The differences between exports and imports

The value of the money in relation to other currencies

The amount of money the country owes to other countries

Other Economic MeasurementsConsumer price index (CPI)Unemployment rate


Help consumers to make buying decisions. This measures inflation.

Indicator of a country situation. No work, no money, no buying…

Read the Newspaper!!!!!!!

Find an article that involves International Business

Get ready to talk about it next class…

One page.

Write your name.

Elaborate:

How International Business affects you

ib chapter2

Business

economic systems types

stuffed animals price

economic development

setting activities

market price

limited resources

pull inflation

push inflation