Define economics, and describe the different types of economic systems.

Why does water cost less than diamonds? It’s a matter of supply and demand—a problem that Bryan Weirmoyer faces every day as a sales executive for a real estate development company. How can businesses use basic economic concepts to their advantage?

Explain the principles of supply and demand, and describe the factors that affect each principle.

For many business owners, weathering shifts in supply and demand is like playing tug of war. The levels of supply and demand for a given good or service shift constantly, each influenced by a variety of factors. Consider the example of a kiosk owner selling coffee on a college campus. Ideally, the owner wants to sell the coffee at a price most students are willing to pay without anyone wanting more, or without any being left over. What factors play into this decision?

Describe the various degrees of business competition.

Perhaps you’ve played the board game Monopoly. Once you own all the property of the same color in the game, you have a monopoly and control all that happens on that property. Although that’s the goal of the board game, large monopolies are rarely allowed in the United States. What is a monopoly? Why are there laws against it? And how does it differ from an oligopoly, monopolistic competition, and perfect competition?

Explain how the various economic indicators—particularly the gross domestic product (GDP), price indices, the unemployment rate, and productivity—reflect the health of an economy.

Greg Johnson is managing the inventory of a large automobile dealership. Before the Great Recession, ordering inventory was simple because the demand for new cars seemed relatively constant. These days, Greg’s not sure about his company’s direction. The economy seems to be improving, but is it really? Are there economic measurements he can use to help him make his decision?

Describe the four stages of the business cycle, and explain how the government uses both fiscal policy and monetary policy to control swings in the business cycle.

Nick and Jacinta Robertson are looking to buy their first home. What information do they need before getting a mortgage? Can government actions have an effect on what Nick and Jacinta do?