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2: Economic Environment

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    3601
    • Boundless
    • Boundless

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    • 2.1: Why it Matters- Economic Environment
      This page introduces fundamental economic principles that aid in understanding choices related to resource allocation and their societal impacts. Using the example of a person's quest for saffron ice cream, it illustrates individual and business decision-making based on demand, cost, and opportunity costs. The module equips learners with analytical tools to assess the economic dimensions of daily life and decision-making.
    • 2.2: What is Economics
      This page explores economics as the study of choices under scarcity, highlighting key concepts such as opportunity cost, microeconomics, and macroeconomics. It discusses the economic impact of trade-offs in personal and societal decisions. It also examines the significance of specialization and division of labor in enhancing productivity and efficiency.
    • 2.3: Economic Systems
      This page discusses economic systems, highlighting market, planned, and mixed economies. It explains that market economies depend on private ownership and consumer choice, while command economies are government-controlled. Most economies are mixed, blending elements from both systems. The text emphasizes the importance of understanding these differences in relation to supply and demand.
    • 2.4: Demand
      This page explains the law of demand, stating that price decreases lead to increased quantity demanded and vice versa, with demand being the overall desire for goods. It highlights the ceteris paribus assumption in demand and supply analysis and discusses factors affecting demand, such as income changes, consumer preferences, and the pricing of related goods. With rising incomes, demand shifts for normal goods, while inferior goods see decreased demand.
    • 2.5: Supply
      This page discusses the law of supply in economics, emphasizing that quantity supplied rises with price and detailing factors like production costs, technological advancements, and government policies that affect supply curves. It illustrates these concepts with examples such as gasoline and cars, and includes a simulation involving food trucks to help participants understand the dynamics of supply through interactive experience.
    • 2.6: Equilibrium
      This page discusses market equilibrium, focusing on how supply and demand determine prices and quantities. It defines equilibrium as the point where supply equals demand, and explains surpluses and shortages. Various methods for finding equilibrium are outlined, emphasizing the impact of market changes. Examples, such as salmon fishing and digital media's effect on postal services, illustrate factors influencing supply and demand.
    • 2.7: The Health of the Economy
      This page examines economic indicators used to assess the health of an economy, including GDP, CPI, unemployment rates, and Consumer Confidence Index (CCI). Key objectives are economic growth, high employment, and price stability. GDP measures output, while unemployment is categorized into cyclical, structural, and frictional types. Stable inflation is favorable, whereas hyperinflation can destabilize economies.
    • 2.8: Economic Stages
      This page discusses the four stages of the economy—expansion, peak, contraction, and trough—and their effects on business operations, particularly for a construction company, Normal Maintenance. It details how demand fluctuations influence business challenges, including labor shortages and customer complaints during expansion, overwhelm at peak, layoffs during contraction, and operational difficulties at trough. The owner uses experience to manage these economic cycles effectively.
    • 2.9: Putting It Together- Economic Environment
      This page outlines fundamental economic principles affecting business environments, focusing on decision-making related to scarce resources at micro and macro levels. It describes various economic systems—traditional, planned, and market—and key concepts like demand, supply, and equilibrium.

    This page titled 2: Economic Environment is shared under a CC BY-SA 4.0 license and was authored, remixed, and/or curated by Boundless via source content that was edited to the style and standards of the LibreTexts platform.