Download Introduction to Business Economics

Macro vs. Micro
Lesson objectives
• Define key terms in the field of business economics
• Display understanding of the use of graphical tools as
representations of macroeconomic and microeconomic
principles
• Identify the differences and similarities between
macroeconomics and microeconomics
• Describe why business economics is an important field of
study
Key Vocabulary
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Economics policies
Economics
Free enterprise economy
Households
Macroeconomics
Market economy
Microeconomics
Need
Resources
Standard of living
Want
How do Businesses make
choices?
• Economics is the study of how people and organizations make
choices in conditions of scarcity
• Individuals and households make choices in order to make the
most out of their limited resources to meet their needs and
wants
• Businesses likewise make choices as they convert limited
resources into goods and services to meet our needs and
wants, thereby maximizing their profit
How do Businesses Make
Choices?
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How does a company decide what to make?
The average price of a Big Mac is $4.80.
What does it cost to produce?
Who buys it?
Is this a good price?
For whom?
Price
$4.80
$6.00
$2.50
Yes/no
For Whom
How do Businesses Make
Choices?
• All of these business questions are just as relevant to the
economist, whose primary area of study is how people,
organizations, and societies make choices
The Market Economy
• Get into pairs and discuss the following:
• Who makes decisions about whether or not McDonald’s is going
to sell Big Macs?
• Who decides what price to charge for them?
• Who determines how much to pay McDonald’s employees?
• What goals is McDonald’s working toward when it makes these
decisions?
The Market Economy
• A market economy is built upon two key players—consumers
and producers. The interaction between these two key
players answers the first two questions posed.
• Another two key players in the market economy—businesses
and individuals (as employees or prospective employees), and
the interaction between them—answers the third question.
• Profit is created by providing products that consumers want to
buy is the answer to the final question.
Choices and Limited Resources
• Presentation
Definition of Macroeconomics
• Macroeconomics is an area of study that:
• seeks to determine the aggregate (total) effect of interaction
between all buyers and sellers in a market by measuring:
1. gross domestic product (GDP): the total amount of goods and
services a country (the United States, for example) produces in
a year.
2. rate of inflation: how much prices go up in a given amount of
time.
3. unemployment rate
4. fiscal policy: where and how much money the government
spends in the economy and takes in through taxes.
5. monetary policy: how much money is in circulation in the
economy (this is referred to as monetary policy).
Definition of Microeconomics
• Microeconomics is an area of study that:
• seeks to determine how individuals and businesses make
decisions and the consequences of these decisions by measuring:
1. the impact of supply and demand on a business.
2. the costs and benefits of individual and business consumption
and production and pricing decisions.
3. the effects of competition.
Definitions of Micro and Macro
economics
• Download- Reading: Microeconomics Explained
• Download- Reading: Macroeconomics Explained
• Highlight or underline key terms and concepts
Examples of Macro-economics
• Today, you are going to research current macro economic
events.
• Your goal is to identify 5 current events (everyone at your
table must have DIFFERENT events) that are related to macro
economics.
• First summarize the article (who, what, when, where, why, or
how)
• Next describe how it fits into the macroeconomic picture.
• Last attach a link to the article online
• Submit to the website.
Examples of Microeconomics
• Today, you are going to research current micro economic
events.
• Your goal is to identify 5 current events (everyone at your
table must have DIFFERENT events) that are related to micro
economics.
• First summarize the article (who, what, when, where, why, or
how)
• Next describe how it fits into the microeconomic picture.
• Last attach a link to the article online
• Submit to the website.
Venn Diagram
• Download- Venn Diagram: Macroeconomics vs.
Microeconomics
• Think about how different players in a market economy might be
more or less impacted by what each field covers
• Turn into dropbox
Compare and Contrast
• How would you incorporate the terms:
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Business
Individuals
Government
Non-profit agencies
• Indicate the importance to or the impact each term has the
given category
• Why would governments and businesses be more concerned
with macroeconomics than individuals?
• Why would businesses and individuals be more concerned
with microeconomics than government?
The Power of Graphs
• Download- Assignment: The Power of Graphs
• Which graph gets the point together and why?
• Because economic information is primarily numbers, it lends
itself to graphic representation.
• Both economists and businesspeople love graphs because
they get a lot of information across in a concise and clear way
The Power of Graphs
• Create a nonlinguistic representation of the macroeconomic
issue of national debt
• Be sure to use correct spacing and keep things to scale
Big Mac vs. the Whopper
• What would happen to Big Mac sales if Burger King increased
the price of the Whopper to $5? Cut the price to 50¢?
Enrichment
• Watch the 20-minute “Story of Stuff” online at
http://www.storyofstuff.com/ and then write two short
responses.
• The first should be about how the video relates to
microeconomics.
• The second should be about how it relates to macroeconomics.
Cross-Curricular Integration
• Research the command economy system and to complete a
Venn diagram comparing it with a market economy.