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WHAT IS A BUSINESS? A business is the production and sale of goods / services to consumers

WHAT IS A BUSINESS? A business is the production and sale of goods / services to consumers. They can be small (ex. a hot dog vendor on the street corner) or very large (a multinational company such as Nike). Markets. Doesn’t have to be a physical location.

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WHAT IS A BUSINESS? A business is the production and sale of goods / services to consumers

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  1. WHATISABUSINESS? Abusinessistheproductionandsaleof goods/servicestoconsumers Theycanbesmall(ex.ahotdogvendor onthestreetcorner)orverylarge(a multinationalcompanysuchasNike)

  2. Markets Doesn’thavetobeaphysicallocation Theyexistonlywhenconsumers/producerscome togethertoexchangegoods/servicesformoney Soamarketcouldbeastorewhereyoubuyjeans ore-bay

  3. Marketscontd. 2majortypesofmarkets 1)consumermarket“B2C” •Madeupofallthethingsweuseforpersonal consumption 2)businesstobusinessmarket“B2B” -madeupofallthecompanieswhichsellthingstoother businesses

  4. Interdependence Consumersandproducersdependoneach otherequally Consumersneedproducerstomanufacture andsupplygoodsandservices Producersneedconsumerstobuythegoods theymanufactureandoffer

  5. Interdependence Inordertoremainsuccessfulcompanies muststayintouchwithconsumerscurrent wants,demandsandneeds •Examples:Nestle’snewflavoredwatersand McDonald’shealthiermenuchoices Companiesalsorelyoneachotherforraw materials,equipmentandservices

  6. AProduceris… Someonethatmakesgoodsorservices availabletoconsumers Allbusinessesproducesomething

  7. BASICECONOMICS

  8. Haveyoueverwondered whatdetermines theprices ofthethingsyoubuy?

  9. Itcomesdowntosupply vs.demand

  10. Demand Representstheconsumersideofthemarket Howmuchofparticulargood/servicedo consumerswant 3thingsdeterminethelevelofdemand •Desire,Abilitytopay,Willingnesstopay

  11. Supply Representsthemanufacturersideofthe market Howmuchofaparticulargood/service themanufacturercan(oriswillingto) provide

  12. Thebattlebetweensupply anddemand demand supply

  13. DemandfortootsiepopsinRustonia 100 Point A Price 20 Market demand 700 80 60 Price 40 20 A Demand 0 0 100 200 300400 Quantity 500 600 700 800

  14. DemandfortootsiepopsinRustonia 100 Point A B Price 20 40 Market demand 700 80 500 60 40 Price B A Demand 20 0 0 100 200 300400 Quantity 500 600 700 800

  15. DemandfortootsiepopsinRustonia 100 Point A B C Price 20 40 60 Market demand 700 500 80 350 C 60 Price B 40 A Demand 20 0 0 100 200 300400 Quantity 500 600 700 800

  16. DemandfortootsiepopsinRustonia 100 Point Price Market demand 700 500 350 200 D A B C D 20 40 60 80 80 60 C Price B 40 A Demand 20 0 0 100 200 300400 Quantity 500 600 700 800

  17. Sowhatdowenoticeaboutthe DemandCURVE Asthepriceofagooddecreasesdemand forthegoodwillincrease

  18. SupplyfortootsiepopsinRustonia Supply 100 80 60 Price 40 Point A Price 20 Supply 100 A 20 0 0 100 200 300 500 600 700 800 400 Quantity

  19. SupplyfortootsiepopsinRustonia Supply 100 80 60 Price 40 B Point A Price 20 Supply 100 B 40 A 200 20 0 0 100 200 300 500 600 700 800 400 Quantity

  20. SupplyfortootsiepopsinRustonia Supply C 100 80 60 Price 40 B Point A Price 20 Supply 100 A B C 40 60 200 350 20 0 0 100 200 300 500 600 700 800 400 Quantity

  21. SupplyfortootsiepopsinRustonia Supply D C 100 80 60 Price 40 B Point A Price 20 Supply 100 A B C D 40 60 80 200 350 530 20 0 0 100 200 300 500 600 700 800 400 Quantity

  22. SoWhatdowenoticeabout THESUPPLYCURVE •Asthepriceofagoodincreasessupply ofthegoodwillincrease

  23. Buthowdoesallofthis determinethepriceof goods?

  24. It’ssomethingcalled Equilibrium Themarketissaidtobeinequilibrium whensupplyequalsdemand

  25. Combiningthesupplyanddemandcurvefortootsie popsinRustonia Supply 100 80 Marketisinequilibrium Demand=Supply Demand 60 40 20 0 Price 0 100 200 300 400 500 600 700 800 Quantity

  26. Scenarios Whathappenswhendemandexceedssupply? WhentheNintendoWiiwas introduced…demandwasveryhigh butsupplywaslow Result??pricesskyrocketed!!! peoplewereabletochargehundredsofdollars morefortheWiithantheyhadpurchaseditfor

  27. Scenarios Whathappenswhensupplyexceedsdemand? WhenPS3wasintroduced,demandfor PlayStation2dwindledbecausepeople wouldratherbuythelatestversion; howeversupplywashigh. Result?thepriceofPlayStation2 droppeddramaticallyasretailsjustwantedto getridoftheproduct.

  28. OtherScenarios Consider… ThepriceofHallowe’encandyon October25vs.itspriceonNov1 ThepriceofChristmasdecorations onDecember1versusDecember26 Whycan’tIfindaBBQatCanadianTireinOctober? Whycan’tIfindasnowblowerinMay?

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