04_Econ8e_PPT_Ch04

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The market systemand the private and public sectors : 

The market systemand the private and public sectors Chapter 4 Economics, 8th Edition Boyes/Melvin

Private vs. Public Sectors : 

Private vs. Public Sectors The private sector is made up of households, businesses, and the international sector. The public sector refers to activity by the various levels of government. Productive activity occurs in both sectors. A basic problem is determining which sectorcan best produce a given good or service. 2 Copyright © Cengage Learning. All rights reserved.

The Market System : 

The Market System In the market system of the private sector, the consumer is supreme. Consumer Sovereignty: consumers determine what is produced through their purchases of goods and services. 3 Copyright © Cengage Learning. All rights reserved.

Profit and the Allocation of Resources : 

Profit and the Allocation of Resources When a good or service seems to have the potential to generate a profit, someone with entrepreneurial ability will put together the resources needed to offer that good or service for sale. 4 Copyright © Cengage Learning. All rights reserved.

A Demand Change in the Market for pdas : 

A Demand Change in the Market for pdas 5 Copyright © Cengage Learning. All rights reserved.

A Demand Change in the Market for smartphones : 

A Demand Change in the Market for smartphones 6 Copyright © Cengage Learning. All rights reserved.

Income Determination : 

Income Determination Buyers and sellers of goods and services and resource owners are linked together in an economy. For every dollar someone spends, someone else receives a dollar as income 7 Copyright © Cengage Learning. All rights reserved.

Households : 

Households Household: one or more persons who occupy a unit of housing. Householder: the person in whose name the house or apartment is owned or rented. Household spending is called consumption. 8 Copyright © Cengage Learning. All rights reserved.

Household Spending and Income : 

Household Spending and Income 9 Copyright © Cengage Learning. All rights reserved.

Business Firms : 

Business Firms A business firm is a business organization controlled by a single management. 10 Copyright © Cengage Learning. All rights reserved.

Forms of Business Organization : 

Forms of Business Organization Sole Proprietorship: A business owned by a single person, who receives all the profits and is responsible for all its debts. Partnership: A business owned by two or more partners, who share the profits and share the responsibility for debts or losses. There are far more sole proprietorships and partnerships in the U.S. than there are corporations. 11 Copyright © Cengage Learning. All rights reserved.

Forms of Business Organization : 

Forms of Business Organization Corporation: A legal fictitious person. The law sees the corporation as a distinct person from its owners. The owners are shareholders who share the profits but are not held liable beyond their investment (stock). They enjoy limited liability. A multinational business is one that operates in several countries. 12 Copyright © Cengage Learning. All rights reserved.

Business Spending : 

Business Spending Investments are the expenditures by business firms for capital goods—machines, tools, and buildings—that will be used to produce goods and services. 13 Copyright © Cengage Learning. All rights reserved.

U.S. Investment Spending : 

U.S. Investment Spending 14 Copyright © Cengage Learning. All rights reserved.

International Sector : 

International Sector Industrial Countries have high per capita incomes The economies of the industrial nations are highly interdependent Developing Countries have low per capita incomes Developing countries greatly outnumber industrial countries 15 Copyright © Cengage Learning. All rights reserved.

World Economic Development : 

World Economic Development 16 Copyright © Cengage Learning. All rights reserved.

World Economic Development : 

World Economic Development 17 Copyright © Cengage Learning. All rights reserved.

The Industrial Market Economies : 

The Industrial Market Economies 18 Copyright © Cengage Learning. All rights reserved.

International Sector Spending : 

International Sector Spending The largest trading partners with the U.S. are Canada, Mexico, China, and Western Europe. 19 Copyright © Cengage Learning. All rights reserved.

Direction of U.S. Trade : 

Direction of U.S. Trade 20 Copyright © Cengage Learning. All rights reserved.

U.S. Net Exports : 

U.S. Net Exports 21 Copyright © Cengage Learning. All rights reserved.

Government : 

Government Government in the U.S. exists at the federal, state, and local levels. 22 Copyright © Cengage Learning. All rights reserved.

Federal, State, and Local Government Expenditures for Goods and Services : 

Federal, State, and Local Government Expenditures for Goods and Services 23 Copyright © Cengage Learning. All rights reserved.

Transfer Payments : 

Transfer Payments The government serves as an intermediary, taking money from some taxpayers and transferring this income to others. 24 Copyright © Cengage Learning. All rights reserved.

U.S. Federal Budget Deficits : 

U.S. Federal Budget Deficits 25 Copyright © Cengage Learning. All rights reserved.

The Circular Flow: Households, Firms, Government, and Foreign Countries : 

The Circular Flow: Households, Firms, Government, and Foreign Countries 26 Copyright © Cengage Learning. All rights reserved.

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