Business and Economy Discussion Questions

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Business and Economy Discussion Questions 1. Business plays a critical role in the economy. In order to understand this relationship, one must understand the relationship between macroeconomics and microeconomics. Macroeconomics is "the field of economics that studies the behavior of the aggregate economy. Macroeconomics examines economy-wide phenomena such as changes in unemployment, national income, rate of growth, gross domestic product, inflation and price levels" (Investopedia, 2011). In contrast, microeconomics looks at the decisions made by firms and individuals (Investopedia, 2011). It is impossible to understand microeconomics and business without understanding the larger economic system. Moreover, individual business decisions can impact the economy as a whole. This is because in a free market, or at least a mostly free market, as exist in the United States, supply and demand determine the prices of goods and services. "Prices, in turn, tell businesses what to produce; if people want more of a particular good than the HYPERLINK "" economy is producing, the price of the good rises. That catches the attention of new or other companies that, sensing an opportunity to earn profits, start producing more of that good. On the other hand, if people want less of the good, prices fall and less competitive producers either go out of business or start producing different goods" (Beggs, 2012). 2. For-profit and nonprofit organizations both
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