Business in class 1 6 15 Two market segments low tech and high tech based on size and performance They drift over time as costumers want smaller and faster gadgets Functional areas of Business Research and Development Marketing Sales Production Finance Basic Economic concepts Economics The study of distributing resources for the production of good and services within a social system Resources Raw materials tools machinery capital and people factors of production Demand Supply and Price The principle elements of economics Economic Systems Command communism socialism free market and mixed Command economics The government controls what goods services are produced their quantity and prices Free market system private enterprise or capitalist What goods and services are produced their quantities and prices are based upon consumers demand and supply producers Government s role encourage free and fair competition between private producers Adam Smith wrote the Wealth of Nations 1776 promoted idea of unrestricted free trade Wealth of Nations Invisible Hand An economic principle holding that the greatest benefit to a society is brought about by individuals acting freely in a competitive marketplace in the pursuit of their own self interest If each consumer is allowed to choose freely what to buy and each producer is allowed to choose freely what to sell and how to produce it the market will settle on a product distribution and prices that are beneficial to all the individual members of a community Individual self interest Promotes competition innovation product and process greater value the worth importance or usefulness of something to somebody Benefits All members of the community not just each individual More products more choices New products additional wealth Lower prices Yields Efficient allocation of resources especially through the division of labor specialization of tasks matched to each individual s skills Free market requirements include Private property Freedom of choice Fair competition Right to keep profits