Revolutionary Technology

Every once-in-a-while an amazing piece of technology appears. The Sixth Sense is definitely one of these items. Check out the link to the video where Pattie Maes demos the work of Pranav Mistry.

The Sixth Sense uses the information of the Internet along with a camera and portable display projector to truly put information at the user’s fingertips. Look-out iPhone!

Supply - Part 2

In order to supply a product, a combination of land, labor, capital, and entreprenurs must come together. This combination between the factors of production and the output of goods and services is addressed by the theory of production.

The theory of production is usually divided into periods known as the short run and long run. In the short run, it is assumed that this period allows only the change in the variable known as labor, while the long run allows producers to change quantities of all of their resources (building new factories, producing new product lines, large-scale retraining, etc.). Read more

Supply - Part 1

While demand looks at the consumer and their willingness and ability to purchase an item, supply looks at the producer. Supply is based on the voluntary decisions made by producers as to the amount of an item to offer for sale at any given price. Supply is defined as the amount of a product that would be offered at for sale at all possible prices that could prevail in the market.

The Law of Supply has a direct relationship between quantity and price, unlike the Law of Demand which has an inverse relationship. The Law of Supply states that the higher the price, the more supply will be offered and the lower the price, the less the amount of supply that will be offered. This should not be surprising, it is a simple matter of profit seeking. Read more

9.7 Trillion and Counting

The stimulus package the U.S. Congress just passed, brings the amount of money spent on bailout programs to more than 9.7 trillion dollars. This figure is enough to pay off more than 90% of the U.S. home mortgages. Where is it going and how can we afford to pay off our Federal deficit?

With the debt at $10,772,378,548,982.35 (each person’s share is about $35,083.39) and several more trillions of dollars being added by the current financial crisis, when does it stop? How does it impact our standing in the world? Is the U.S. in danger of collapse? What might happen if the U.S. declares bankruptcy? Is China a threat?

These questions dominated class today and many of them did not come with ready made answers. It’s true that China is somewhat linked to the U.S. financial locomotive, however, because of their size and ability over time to create new partnerships with other countries, they are still going to be a growing, competitive and dominant world power.

Objectives:

• Analyze the elasticity of demand for a product
• Understand the factors that determine demand elasticity

Homework: Study for tomorrow’s chapter 4 quiz.

Demand - Curve & Diminishing Returns

Demand is often represented as the desire to have or own a certain item. Using this definition, anyone who would like to own a car could be said to demand one. In order for demand to be counted in the marketplace, however, the mere desire for a product is not enough.  This desire must coincide with the ability and willingness to pay. Only people that meet this criteria can be said to truly have demand. It is these individuals who will compete with others that have similar demands for the available products.

To illustrate demand we have two tools, the demand schedule and demand curve. The demand schedule is T-chart that shows quantity demanded at a given price. The demand curve uses the values provided by the the demand schedule to create a chart plotting the quantity demanded versus the price. While gathering precise data isn’t always easy, these tools provide a powerful method of analyzing the type of consumer demand for a product. Read more

Chapter 3 Quiz & Unit Review

Today we took the chapter three quiz. Following the quiz, we reviewed the objectives from unit one (chapters one through three).

Objectives:

• Demonstrate mastery of chapter three objectives
• Review Unit one objectives

Homework: Study for unit 1 exam, Monday the February 2.

Business Organization - Current Issues

Topics brought up include:

• Starbucks
  • Are store owners compensated when stores are closed?
  • If profits are down 69%, how is this measured?
• Citibank
• Wells Fargo and Wachovia
  • Will Wachovia cost Wells Fargo too much to keep?
• Yahoo
• British Airways and Iberia
  • What was the benefit that brought the companies together?
  • What has caused British Airways to fall from the lead position in the merger?

Objectives:

• Discuss current issues in regards to business organization

Homework: Study for the chapter 3 quiz, Friday the 30th. Unit 1 exam, Monday the February 2.

Other Business Structures

Examples of nonprofit institutions include organizations such as schools, churches, hospitals, welfare groups, and adoption agencies. Most of these organizations are legally incorporated to take advantage of unlimited life and limited liability. They are similar to profit-seeking businesses, but do not issue stock, pay dividends, or pay income taxes.

Their activities often produce revenues in excess of expenses, but they use the surplus to further the work of their institutions, not to pay dividends to shareholders. Their efforts are difficult to analyze economically, however, because the value of their products is not easy to measure. Even so, they are an important part of our economic system.

Examples of nonprofit organizations:

• cooperatives
• labor, professional, and business organizations
• government

Objectives:

• Describe nonprofit organizations
• Explain the direct and indirect role of government in our economy

Wikipedia’s definition of a nonprofit organization.

Here are the IRS rule regarding a nonprofit organization.

Homework: Find an article and write a summary - business organization (sole-proprietorship, partnership, corporation) problems (lawsuit, takeover, stock issues, etc.) due Wednesday the 28th due Thursday the 29th. Chapter 3 quiz, Friday the 30th. Unit 1 exam, Monday the February 2.

Note: A question was asked regarding the difference between a nonprofit organization and a not-for-profit organization, here is an answer.

Growing a Business

There are generally two methods a business can use to grow.  The first is reinvesting its profits. The second method, is to expand though a merger. Both methods have benefits as well as drawbacks.

When a business seeks to grow through reinvestment, they are using their revenue from sales to invest in capital  or labor (factory machinery, new technologies, more workers, etc.).  After subtracting expenses from sales, the business is left with net income. It is this figure that determines the ability of a business to reinvest in labor  or capital. This reinvestment allows the business to produce additional products and increases their sales (hopefully their net income). The major drawback to this method is the slower realization of growth. A company must rely on its profits and may not be able to raise enough money to invest as rapidly as desired.

When a firm grows through a merger, it may do so for a number of reasons. It may seek to grow faster, become more efficient, acquire or deliver a better product, eliminate a rival, or improve it’s image. Several drawbacks to this strategy exist, including too rapid of growth (unsustainable), loss of identity, and increased government regulation/interference.

Objectives:

• Explain how businesses can reinvest their profits to grow and expand
• Recognize the reasons that cause firms to merge
• Identify two different types of mergers

Here is a resource that takes an in-depth look at mergers.

Homework: Find an article and write a summary - business organization (sole-proprietorship, partnership, corporation) problems (lawsuit, takeover, stock issues, etc.) due Wednesday the 28th due Thursday the 29th. Chapter 3 quiz, Friday the 30th. Unit 1 exam, Monday the February 2.

Corporations

A corporation is a kind of business organization made up of a number of people who, according to law can act as a single person. Corporations account for approximately one-fifth of the firms in the United States and about 90% of all sales. A corporation is a form of business organization recognized by law as a separate legal entity having all the rights of an individual. This status gives the corporation the right to buy and sell property, enter into legal contracts, and to sue and be sued.

Some of the advantages of corporations include:

• ease of raising capital
• owners have limited liability
• business’s life is unlimited

Some of the advantages of corporations include:

• charter is expensive
• corporate income is taxed twice
• subject to government regulation.

Objectives:

• Describe the characteristics of a corporation
• Explain some of the advantages and disadvantages of a corporation

Here is a link to a resource that explains how to form a corporation, advantages, and disadvantages.

Homework: Find an article and write a summary - business organization (sole-proprietorship, partnership, corporation) problems (lawsuit, takeover, stock issues, etc.) due Wednesday the 28th.

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