COMMERCE 1B03 Chapter Notes - Chapter 2: Invisible Hand
14 Oct 2018
School
Department
Course
Professor
Chapter 2
How Economic Issues Affect BUsiness
How Economic Conditions Affect Business
How Economics is Linked to Business
●Economic concepts are the basis for the most major business decisions
●Economics is the study of how society chooses to employ resources to produce products and
distribute them for consumption among various competing individuals
●Both have the global economy
●Resource development the study of how to increase resources and the creation of the
conditions that will make better use of those resources (e.g recycling)
Economics: Two Branches
●Macroeconomics: looks at the operation of a nation's economy as a while
●Microeconomics: looks at the behaviour of people and organizations in particular markets
Growth Economics & How Businesses Benefit the Community
●Business people do not deliberately set out to help others. They work primarily for their own
prosperity and growth. Yet as people improve their own situation in life, Adam Smith said, their
efforts serve as an “invisible hand” that helps the economy grow and prosper through the
production of needed good, services, and ideas.
●Invisible Hand: coined by Adam Smith to describe the process that turns self-direct gain into
social and economic benefits for all.
Understanding Free-Market Capitalism
●Capitalism (free-market economies): an economic system in which all or most of the factors of
production and distribution are privately owned and operated for profit.
●Business people, not government officials, decide what to product and how much , what to
charge.
Document Summary
Economic concepts are the basis for the most major business decisions. Economics is the study of how society chooses to employ resources to produce products and distribute them for consumption among various competing individuals. Resource development the study of how to increase resources and the creation of the conditions that will make better use of those resources (e. g recycling) Macroeconomics: looks at the operation of a nation"s economy as a while. Microeconomics: looks at the behaviour of people and organizations in particular markets. Growth economics & how businesses benefit the community. Business people do not deliberately set out to help others. They work primarily for their own prosperity and growth. Yet as people improve their own situation in life, adam smith said, their efforts serve as an invisible hand that helps the economy grow and prosper through the production of needed good, services, and ideas.
