Review Chp 1 2_0bd4bcc2293c9d576477c97117661698

1.

REVIEW
REBOOT | From a broken laptop to a real business
CHAPTER 1 → CHAPTER 2 | An exam-week problem becomes a business opportunity
A student’s laptop fails just before an
assignment.
THE FOUNDER’S QUESTIONS
Who needs this?
What value can we add?
ReBoot purchases used devices,
professionally refurbishes and resells them,
and provides short-term rentals and
technical support.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
How do we earn profit?
What might go wrong?
01

2.

ORIGINAL
CHAPTER 1
Understanding What Businesses Do
SLIDE 5
Business
Any profit-seeking organization that provides
goods and services designed to satisfy the
customers’ needs.
Copyright © 2017 Pearson Education, Ltd.
1-2
Business:
essential
starting
point

3.

ORIGINAL
CHAPTER 1
Seeing Business from the Inside Out
Business
mindset
SLIDE 20
Business mindset
A view of business that considers the difficult
decisions that must be made and
the many problems that must be overcome
before companies can deliver the products that
satisfy customer needs
Copyright © 2017 Pearson Education, Ltd.
1-3

4.

REVIEW
First principles: how does a business work?
ReBoot has interested students, but the founders must establish a sustainable model.
BUSINESS
BUSINESS MINDSET
A profit-seeking organization that provides goods
and services designed to satisfy customer needs.
View the company as an interconnected system that
creates customer value, uses scarce resources and
faces risk.
BUSINESS MODEL
REVENUE ≠ PROFIT
A framework describing how the firm intends to
generate revenue. ReBoot: device sales, rentals and
repair fees.
Revenue = money received from sales. Profit =
revenue minus relevant expenses. Strong sales
alone do not guarantee profit.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
04

5.

REVIEW
Calculate revenue and profit
Five refurbished laptops sell for ₺8,000 each. Purchase, labor, components and other expenses total ₺34,000.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
05

6.

REVIEW
Calculate revenue and profit
Five refurbished laptops sell for ₺8,000 each. Purchase, labor, components and other expenses total ₺34,000.
How much REVENUE? How much PROFIT?
BA 1103 • Chapters 1–2 • Concepts, choices, and application
06

7.

REVIEW
Calculate revenue and profit
Five refurbished laptops sell for ₺8,000 each. Purchase, labor, components and other expenses total ₺34,000.
How much REVENUE? How much PROFIT?
ANSWER Revenue ₺40,000; profit ₺6,000
Revenue is the total sales proceeds (5 × ₺8,000). Profit subtracts ALL ₺34,000 expenses. Revenue is
not the amount retained by the business.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
07

8.

ORIGINAL
CHAPTER 1
SLIDE 6
Exhibit 1.1
Adding Value to Satisfy
Customers
Copyright © 2017 Pearson Education, Ltd.
Addingvalue
diagram
1-8

9.

ORIGINAL
CHAPTER 1
SLIDE 9
Competing to Attract and
Satisfy Customers
Competitive
advantage
Competitive advantage
Some aspect of a product or company that
makes it more appealing to its target customers
Copyright © 2017 Pearson Education, Ltd.
1-9

10.

REVIEW
How can ReBoot win customers?
Start with each definition; then apply it to ReBoot.
ADDING VALUE
COMPETITIVE ADVANTAGE
Definition: Increasing the usefulness or perceived worth of
inputs through business activities.
Definition: A feature that makes a business more appealing
to its target customers than its rivals.
ReBoot: Inspects, repairs and warranties used laptops,
making them more reliable for students.
ReBoot: Certified devices, transparent reports, a warranty
and quick support.
RISK
↔ REWARD
BARRIERS TO ENTRY
Definition: Owners accept uncertainty in the hope of
earning a future reward.
Definition: Resources or capabilities required before a firm
can compete in a market.
ReBoot: Investing in repairs risks unsold inventory, but
successful sales can generate profit.
ReBoot: Startup funds, skilled technicians, tools, suppliers
and customer trust.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
10

11.

REVIEW
Goods-producing vs service businesses
Compare the main output and the resources needed, not just the industry name.
GOODS-PRODUCING
SERVICE
Main output: Tangible goods; production often needs
machinery, materials and facilities.
Main output: An intangible activity, experience or expertise.
Capital-intensive: Relatively high investment in
equipment/assets rather than labor.
Examples: Car manufacturing, semiconductor plants,
automated bottling lines.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
Labor-intensive: Relatively high reliance on people and their
working time.
Examples: Hair salons, childcare, tutoring, hospitality.
ReBoot combines sales of refurbished GOODS with repair
and rental SERVICES.
11

12.

REVIEW
Profit motive does not eliminate responsibility
An educational charity offers to cooperate with ReBoot.
FOR-PROFIT
NONPROFIT
ReBoot seeks profit through meeting customer
needs.
An organization pursuing a mission rather than
profit as the primary objective; e.g., a charitable
laptop donation program.
STAKEHOLDERS
SOCIAL IMPACT
People/groups affected by company activities:
customers, employees, suppliers, owners and
community.
Positive: affordable digital access, jobs. Negative:
electronic waste, misuse of personal data if
mishandled.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
12

13.

ORIGINAL
CHAPTER 1
SLIDE 24
Exhibit 1.4
Positive and Negative
Effects of Business
Copyright © 2017 Pearson Education, Ltd.
Positive and
negative
impacts
1-13

14.

REVIEW
Five business environments | One connected story
Each event below changes ReBoot’s decisions — identify the PRIMARY environment.
ECONOMIC
Inflation drives up replacement-part costs and reduces buying power.
MARKET
A direct competitor opens; target customers compare prices and
warranties.
SOCIAL
Student preferences shift toward sustainability and device reuse.
TECHNOLOGICAL
New testing software improves the diagnosis and repair process.
LEGAL / REGULATORY
Consumer-warranty, personal-data and e-waste rules change.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
14

15.

ORIGINAL
CHAPTER 1
SLIDE 26
Exhibit 1.5
The Multiple Environments
of Business
Copyright © 2017 Pearson Education, Ltd.
All five
environmen
ts
1-15

16.

ORIGINAL
CHAPTER 1
SLIDE 27
Recognizing the Multiple
Environments of Business (cont.)
Economic +
market
Economic environment
The conditions and forces that affect the cost
and availability of goods, services, and labor and
thereby shape the behavior of buyers and sellers
Legal and regulatory environment
Laws and regulations at local, national, and
even international levels
Copyright © 2017 Pearson Education, Ltd.
1-16

17.

ORIGINAL
CHAPTER 1
SLIDE 28
Recognizing the Multiple
Environments of Business (cont.)
Market +
entry
barriers
Market environment
A company’s target customers, the buying
influences that shape the behavior of those
customers, and competitors that market similar
products to those customers
Copyright © 2017 Pearson Education, Ltd.
1-17

18.

ORIGINAL
CHAPTER 1
SLIDE 29
Recognizing the Multiple
Environments of Business
Social
Social environment
Trends and forces in society at large
E.g. demography, diversity, lifestyles
Stakeholders
Internal and external groups affected by a company’s
decisions and activities
Various segments of society
Copyright © 2017 Pearson Education, Ltd.
1-18

19.

ORIGINAL
CHAPTER 1
SLIDE 32
Recognizing the Multiple
Environments of Business (cont.)
Technology
+ legal
Technological environment
Forces resulting from the practical application of
science to innovations, products, and processes
Disruptive technologies
Those that fundamentally change the nature of an industry
(e.g. the mobile revolution)
Can be powerful enough to create or destroy entire
companies
Copyright © 2017 Pearson Education, Ltd.
1-19

20.

REVIEW
Economic environment vs market environment
Distinguish broad economic forces from the company’s own competitive arena.
ECONOMIC ENVIRONMENT
MARKET ENVIRONMENT
Conditions affecting the cost and availability of
goods, services and labor; broad buyer/seller
behavior.
The company’s target customers, buying
influences and competitors.
REBOOT EXAMPLE: economy-wide inflation raises
spare-part and labor costs.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
REBOOT EXAMPLE: students compare ReBoot
with a new refurbished-device competitor.
20

21.

REVIEW
Social, technological and legal/regulatory
Reminder: a single event may affect several environments, but its primary driver matters.
SOCIAL
TECHNOLOGICAL
LEGAL / REGULATORY
Demographic/population
trends; cultural values,
lifestyles and preferences.
Practical application of science
to innovations, products and
processes.
Laws, government rules and
regulatory policies.
Ex: demand for more
sustainable electronics.
Ex: faster AI-assisted fault
diagnostics.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
Ex: e-waste disposal, warranty
or data-protection
requirements.
21

22.

REVIEW
Environment classification test
Device prices rise because the economy is experiencing inflation, while a major rival launches a new resale
platform.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
22

23.

REVIEW
Environment classification test
Device prices rise because the economy is experiencing inflation, while a major rival launches a new resale
platform.
Name the environment associated with EACH event.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
23

24.

REVIEW
Environment classification test
Device prices rise because the economy is experiencing inflation, while a major rival launches a new resale
platform.
Name the environment associated with EACH event.
ANSWER Economic; market
Inflation is a broad economy-wide price condition. A new direct competitor belongs to the specific
market environment. Do not confuse “buying power” with “competitors.”
BA 1103 • Chapters 1–2 • Concepts, choices, and application
24

25.

ORIGINAL
CHAPTER 1
SLIDE 35
Exhibit 1.7
Major Functional Areas in a
Business Enterprise
Copyright © 2017 Pearson Education, Ltd.
1-25
Function
map

26.

ORIGINAL
CHAPTER 1
SLIDE 36
Identifying the Major Functional Areas
in a Business Enterprise
R&D +
operations
Research and development (R&D)
Functional area responsible for conceiving and designing
new products (Product design & engineering)
Information technology (IT)
Systems that promote communication and information
usage through the company, or that allow companies to
offer new services to their customers
Copyright © 2017 Pearson Education, Ltd.
1-26

27.

ORIGINAL
CHAPTER 1
SLIDE 37
Identifying the Major Functional Areas
in a Business Enterprise
Operations
+ logistics
Manufacturing, production, or operations
An area where the company makes whatever it
makes (for goods-producing businesses) or does
whatever it does (for service businesses)
Actual production activity, purchasing, logistics,
facilities management
Copyright © 2017 Pearson Education, Ltd.
1-27

28.

ORIGINAL
CHAPTER 1
SLIDE 38
Identifying the Major Functional Areas
in a Business Enterprise
Marketing
Marketing
Responsible for
identifying opportunities in the marketplace
Working with R&D to develop the products to address
those opportunities
Creating branding and advertising strategies to
communicate with potential customers, and setting
prices
Copyright © 2017 Pearson Education, Ltd.
1-28

29.

ORIGINAL
CHAPTER 1
SLIDE 39
Identifying the Major Functional Areas
in a Business Enterprise
Finance
Finance and accounting
Responsible for virtually every aspect of a firm’s finances
Ensuring that the company has the funds it needs to
operate
Monitoring and controlling how those funds are spent
Drafting reports for company management and outside
audiences such as investors and government regulators
Copyright © 2017 Pearson Education, Ltd.
1-29

30.

ORIGINAL
CHAPTER 1
SLIDE 40
Identifying the Major Functional Areas
in a Business Enterprise
HR
Human resources (HR)
Responsible for recruiting, hiring, training,
developing, and supporting employees
Also making sure the company is in compliance
with the many laws concerning employee rights
and workplace safety
Copyright © 2017 Pearson Education, Ltd.
1-30

31.

ORIGINAL
CHAPTER 1
SLIDE 41
Identifying the Major Functional Areas
in a Business Enterprise
Business
services
Business services
Exist to help companies with specific needs in
law, banking, real estate, and other areas
They can be performed by in-house staff,
external firms, or a combination of the two
Copyright © 2017 Pearson Education, Ltd.
1-31

32.

REVIEW
Which function takes the lead? (1 of 2)
A laptop is repaired, but needs quality control, promotion and delivery.
RESEARCH & DEVELOPMENT
OPERATIONS
Conceives, designs and improves products and
methods. ReBoot: design a faster battery test.
Produces goods or delivers the service. ReBoot:
inspect, repair, test and prepare laptops.
LOGISTICS
MARKETING
Coordinates incoming materials and outgoing
finished products. ReBoot: receive parts and ship
laptops.
Identifies customers and communicates value
through branding, advertising and promotion.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
32

33.

REVIEW
Which function takes the lead? (2 of 2)
A growing ReBoot needs staff, funding, contracts and a stable ordering platform.
HUMAN RESOURCES
FINANCE & ACCOUNTING
Recruits, hires, trains, develops and supports
employees.
Plans, monitors and reports finances; monitors
cash, costs, profitability and funding.
INFORMATION TECHNOLOGY
BUSINESS SERVICES
Maintains information systems, online booking,
payments and repair tracking.
Provides specialized internal/external support such
as legal, banking and property services.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
33

34.

REVIEW
Cross-functional problem solving
A refurbished device is returned because its battery is defective; ReBoot also discovers delayed replacement
batteries.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
34

35.

REVIEW
Cross-functional problem solving
A refurbished device is returned because its battery is defective; ReBoot also discovers delayed replacement
batteries.
Which teams must cooperate, and what does each do?
BA 1103 • Chapters 1–2 • Concepts, choices, and application
35

36.

REVIEW
Cross-functional problem solving
A refurbished device is returned because its battery is defective; ReBoot also discovers delayed replacement
batteries.
Which teams must cooperate, and what does each do?
ANSWER Operations + logistics + R&D + finance + marketing
Operations diagnoses and remedies the defect; logistics obtains and delivers parts; R&D improves
testing; finance evaluates the cost; marketing/customer support communicates the solution. One
function rarely solves every dimension.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
36

37.

REVIEW
ACT II | ReBoot meets the economy
In a world of limited time, talent and money, even a good business cannot do everything.
The founders must choose a location, purchase inventory, hire
technicians and decide prices — without unlimited resources.
Now the company’s decisions become an economics problem.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
37

38.

ORIGINAL
CHAPTER 2
What Is This Thing Called the Economy? (1 of 2)
Economics:
definition
SLIDE 5
• Economy
– The sum total of all the economic activity within a
given region
• Economics
– The study of how a society uses its scarce
resources to produce and distribute goods and
services

39.

ORIGINAL
CHAPTER 2
What Is This Thing Called the Economy? (2 of 2)
Micro vs
macro
SLIDE 6
• Macroeconomics
– The study of “big picture” issues in an economy,
including competitive behavior among firms, the
effect of government policies, and overall
resource allocation issues
• Microeconomics
– The study of how consumers, businesses, and
industries collectively determine the quantity of
goods and services demanded and supplied at
different prices

40.

REVIEW
Microeconomics vs macroeconomics
Distinguish the UNIT of analysis rather than simply whether a company is involved.
MICROECONOMICS
MACROECONOMICS
The behavior of individual customers, firms and
particular markets.
Country-wide economic conditions such as GDP,
inflation, unemployment and policies.
Example: ReBoot chooses whether to price a
laptop at ₺7,000 or ₺7,500.
Example: national inflation reduces overall
household purchasing power.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
40

41.

ORIGINAL
CHAPTER 2
SLIDE 12
Exhibit 2.1: Factors of Production
Five
production
factors

42.

REVIEW
Five factors of production: five distinct roles
Each resource solves a different part of ReBoot’s production challenge.
NATURAL RESOURCES
HUMAN RESOURCES
CAPITAL
Useful resources from nature,
including minerals, land and
water.
People and their productive
labor: technicians and support
staff.
Money and human-made
productive assets: testing
equipment, tools, computers
and workspace.
ENTREPRENEURSHIP
KNOWLEDGE
Innovation, initiative,
coordination and willingness to
take risks to create/operate the
business.
Collective intelligence, expertise
and know-how: diagnostics,
quality-control procedures,
customer insights.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
42

43.

ORIGINAL
CHAPTER 2
The Economic Impact of Scarcity
SLIDE 14
• Scarcity
– A condition of any productive resource that has
finite supply
• Opportunity cost
– The value of the most appealing alternative not
chosen
Scarcity and
opportunity
cost

44.

REVIEW
Scarcity → economic decision → trade-off → opportunity
cost
A decision chain: why limited resources force choices, and what is sacrificed.
1 SCARCITY
ReBoot has only ₺100,000, but wants both new inventory and advanced
test equipment.
2 ECONOMIC
DECISION
The founders must allocate their limited budget to the use that creates
more value.
3 TRADE-OFF
Choosing the testing machine means giving up buying more inventory
now.
4 OPPORTUNITY COST
The value of the BEST forgone option: the benefit from extra inventory
sales.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
44

45.

REVIEW
Test the opportunity cost distinction
ReBoot can afford either (A) a diagnostic machine or (B) additional laptop inventory, but not both. The founders
choose A.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
45

46.

REVIEW
Test the opportunity cost distinction
ReBoot can afford either (A) a diagnostic machine or (B) additional laptop inventory, but not both. The founders
choose A.
What is the opportunity cost? Is it automatically the machine’s
price?
BA 1103 • Chapters 1–2 • Concepts, choices, and application
46

47.

REVIEW
Test the opportunity cost distinction
ReBoot can afford either (A) a diagnostic machine or (B) additional laptop inventory, but not both. The founders
choose A.
What is the opportunity cost? Is it automatically the machine’s
price?
ANSWER The value of B — the best alternative forgone
A trade-off is the need to choose A instead of B. Opportunity cost is the value of the best rejected
alternative (B), not necessarily the explicit amount paid for A.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
47

48.

REVIEW
Three economic indicators — full names and meanings
ReBoot considers growth, the cost of living, and the price trends its suppliers face.
GROSS DOMESTIC
PRODUCT (GDP)
Value of all final goods and
services produced within a
country’s borders during a given
period. Indicates economic
output.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
CONSUMER PRICE INDEX
(CPI)
Tracks price changes in a
representative basket of
consumer goods and services;
often used to measure
consumer inflation.
PRODUCER PRICE INDEX
(PPI)
Tracks prices received by
producers / price trends at
production or wholesale levels;
differs from consumer prices.
48

49.

REVIEW
GDP vs CPI vs PPI — recognition practice
Different statistics answer different economic questions.
GDP = OUTPUT
CPI = CONSUMER PRICES
PPI = PRODUCER PRICES
What was produced within the
borders?
How much does a
representative consumer
basket cost over time?
How are prices changing at the
production / wholesale stage?
Example: a country’s total final
production.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
Example: food, housing,
clothing and utilities.
Example: component prices
suppliers receive.
49

50.

ORIGINAL
CHAPTER 2
Economic Systems
SLIDE 23
• Economic system
– The policies that define a society’s particular
economic structure; the rules by which a society
allocates economic resources
Economic
systems

51.

ORIGINAL
CHAPTER 2
Free-Market System
SLIDE 26
• Free-market system
– An economic system in which decisions about
what to produce and in what quantities are
decided by the market’s buyers and sellers
• Capitalism
– Economic system based on economic freedom
and competition
https://youtu.be/hfnkbp1ipSc
Free-market
decisions

52.

REVIEW
Planned system vs free-market system
ReBoot’s owners set their own prices in a free-market system.
PLANNED SYSTEM
FREE-MARKET SYSTEM
Government largely controls resources and
production decisions: what, how much and for
whom.
Individuals and firms generally decide what and
how to produce, who to sell to and at what price.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
52

53.

ORIGINAL
CHAPTER 2
Nationalization and Privatization
SLIDE 27
• Nationalization
– A government’s takeover of selected companies or
industries
• Privatization
– Turning over services once performed by the
government and allowing private businesses to
perform them instead
Nationalizat
ion /
privatizatio
n

54.

REVIEW
Four government-action terms
NATIONALIZATION
PRIVATIZATION
REGULATION
DEREGULATION
Government takes
ownership/control of
a company or sector.
Private businesses
take over
ownership/services
previously supplied by
government.
Use of rules, laws and
policies to govern
market activity.
Removal or reduction
of government
restrictions to allow
more market-based
decisions.
Opposite direction:
privatization.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
54

55.

ORIGINAL
CHAPTER 2
Stabilizing and Stimulating the Economy
SLIDE 32
• Monetary policy
– Government policy and actions taken by the
Federal Reserve Board to regulate the nation’s
money supply
• Fiscal policy
– Strategy for the use of government revenue
collection and spending to influence the business
cycle
Fiscal vs
monetary
policy

56.

REVIEW
Fiscal policy vs monetary policy
Rule of thumb: taxes/spending = fiscal; interest rates/credit = monetary.
FISCAL POLICY
MONETARY POLICY
Government decisions about taxation, revenues
and public spending.
Central bank actions concerning interest rates,
money/credit conditions.
Example: a subsidy for refurbished devices or
changes in business taxes.
Example: higher interest rates make ReBoot’s
bank loan more expensive.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
56

57.

ORIGINAL
CHAPTER 2
The Forces of Demand and Supply
SLIDE 34
• Demand
– Buyers’ willingness and ability to purchase
products at various price points
• Supply
– A specific quantity of a product that the seller is
able and willing to provide at various prices
• Demand curve
– A graph of the quantities of a product that buyers
will purchase at various prices
Demand
definition

58.

REVIEW
Demand curve: price and quantity demanded
Holding other factors constant (ceteris paribus).
PRICE
LAW OF DEMAND
When price rises, quantity
demanded generally falls.
When price falls, quantity
demanded generally rises.
D
QUANTITY
ReBoot: lower laptop price → more laptops demanded (movement along D).
BA 1103 | Chapters 1–2 | ReBoot case
58

59.

ORIGINAL
CHAPTER 2
Understanding Supply
SLIDE 36
• Supply curve
– A graph of the quantities of a product that sellers
will offer for sale, regardless of demand, at various
prices
Supply
definition

60.

REVIEW
Supply curve: price and quantity supplied
Holding other factors constant (ceteris paribus).
PRICE
S
LAW OF SUPPLY
When price rises, quantity
supplied generally rises.
When price falls, quantity
supplied generally falls.
QUANTITY
ReBoot: higher selling price → more laptops offered (movement along S).
BA 1103 | Chapters 1–2 | ReBoot case
60

61.

ORIGINAL
CHAPTER 2
SLIDE 39
Understanding How Demand and Supply
Interact
• Equilibrium price
– The point at which quantity supplied equals
quantity demanded
• Because the supply and demand curves are
dynamic, so is the equilibrium point
• As variables affecting supply and demand
change, so will the equilibrium price
Equilibrium
definition

62.

REVIEW
Market equilibrium: where demand meets supply
The equilibrium price balances buyers’ and sellers’ planned quantities.
PRICE
S
KEY RELATIONSHIP
Equilibrium price (P*): the price at
which quantity demanded equals
quantity supplied.
EQUILIBRIUM
Above P*: surplus.
Below P*: shortage.
D
QUANTITY
Changing consumer preferences or production costs can SHIFT a whole curve.
BA 1103 | Chapters 1–2 | ReBoot case
62

63.

REVIEW
Movement along a curve vs a shift
Price changes and non-price changes are different mechanisms.
MOVEMENT ALONG A CURVE
SHIFT IN A CURVE
Change in the good’s OWN price, other factors
unchanged.
Change in a factor OTHER than the good’s own
price.
Demand curve slopes downward: price ↓ →
quantity demanded ↑.
Demand: customer income or preference.
Supply curve slopes upward: price ↑ → quantity
supplied ↑.
Entire curve moves, not merely a point.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
Supply: input costs or technology.
63

64.

REVIEW
ReBoot: movement along a curve or a shift?
Two changes happen. Identify which curve changes and why.
EVENT A • PRICE CHANGE
EVENT B • COST CHANGE
ReBoot cuts its laptop selling price from
₺9,000 to ₺8,000.
Better repair software reduces the cost of
refurbishing each laptop.
Quantity demanded increases: movement
DOWN along the same demand curve.
Supply increases: the entire supply curve
shifts RIGHT.
Remember: own price changes → movement along. Non-price determinants → curve
shifts.
BA 1103 | Chapters 1–2 | ReBoot case
64

65.

REVIEW
A demand–supply mini case
ReBoot reduces its own laptop price. Separately, improved repair software lowers its production costs.
Which causes MOVEMENT and which causes a SHIFT?
BA 1103 • Chapters 1–2 • Concepts, choices, and application
65

66.

REVIEW
A demand–supply mini case
ReBoot reduces its own laptop price. Separately, improved repair software lowers its production costs.
Which causes MOVEMENT and which causes a SHIFT?
ANSWER Own price → movement; improved technology → supply shift
The law of demand predicts a higher quantity demanded when ReBoot lowers its own price (other
things equal). Lower unit costs can increase supply at a given price — shifting the supply curve.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
66

67.

REVIEW
Four market structures: the big picture
Classify a market by seller concentration, differentiation and pricing power.
PURE COMPETITION
MONOPOLISTIC COMPETITION
Many sellers; nearly identical products; price
takers.
Many sellers; differentiated products; some price
flexibility.
OLIGOPOLY
MONOPOLY
A few dominant sellers; strategic interdependence.
One dominant supplier; substantial market power;
can be regulated.
BA 1103 | Chapters 1–2 | ReBoot case
67

68.

ORIGINAL
Pure Competition
CHAPTER 2
SLIDE 44
Many sellers offer nearly identical products; individual sellers
have little influence over market price.
Example: Standardized agricultural commodities such as wheat can
approximate pure competition.
Remember: MANY sellers + IDENTICAL products + PRICE TAKERS.

69.

ORIGINAL
Monopolistic Competition
CHAPTER 2
SLIDE 45
Many firms compete with products that are similar but
differentiated by brand, service, quality, or location.
Examples: Restaurants, hair salons, clothing brands, and cafés.
Remember: MANY sellers + DIFFERENTIATED products.

70.

ORIGINAL
Oligopoly
CHAPTER 2
SLIDE 46
A few major suppliers dominate a market. Each firm considers
how competitors might respond to its decisions; barriers to entry
are often high.
Examples: Commercial aircraft manufacturing (Airbus and Boeing),
telecommunications, and major airlines in some markets.
Remember: FEW major sellers + INTERDEPENDENT decisions.

71.

REVIEW
Pure monopoly: one supplier
The key distinction is the number of suppliers and control over the market.
DEFINITION
EXAMPLE & CAUTION
A market structure where one supplier
controls the supply of a particular good or
service, with significant barriers to entry.
A sole local water-network operator can
resemble a natural monopoly. A monopoly
may face government price and service
regulation.
BA 1103 | Chapters 1–2 | ReBoot case
71

72.

REVIEW
Regulated monopoly: monopoly with oversight
Regulation does not mean there are several competing suppliers.
DEFINITION
EXAMPLE
A monopoly whose prices, service
conditions or operations are controlled or
supervised by a public regulator.
A single electricity distribution network can
operate under regulated tariffs and service
standards.
One seller + public oversight.
BA 1103 | Chapters 1–2 | ReBoot case
72

73.

REVIEW
Compare pure and monopolistic competition
PURE COMPETITION
MONOPOLISTIC COMPETITION
Numerous sellers, essentially identical goods,
little individual price-setting power.
Many sellers offer differentiated substitutes,
giving some pricing flexibility.
Example: idealized standardized agricultural
commodities.
Example: cafés, local repair shops; ReBoot
differentiates through warranty and
convenience.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
73

74.

REVIEW
Compare oligopoly, monopoly and regulated monopoly
OLIGOPOLY
MONOPOLY
REGULATED MONOPOLY
A FEW major suppliers; each
considers likely rivals’
reactions.
ONE dominant supplier with
very limited competition.
A monopoly subject to public
controls over prices or
operations.
Example: highly concentrated
telecom markets.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
A pure monopoly may
effectively exclude other
competitors.
Example: a sole regional water
network utility with regulated
tariffs.
74

75.

REVIEW
Business cycles: expansion and recession
Business activity fluctuates as spending, output and employment change.
EXPANSION
RECESSION
Economic activity grows. Production,
employment and consumer spending
generally increase.
A broad decline in economic activity lasting
more than a few months, often reflected in
falling output, income and employment.
ReBoot may see stronger demand.
ReBoot may face weaker sales.
BA 1103 | Chapters 1–2 | ReBoot case
75

76.

REVIEW
Inflation vs deflation
Both describe the overall price level, not the price of one specific product.
INFLATION
DEFLATION
A sustained increase in the general price
level of goods and services. Purchasing
power of a unit of money falls.
A sustained decrease in the general price
level of goods and services. This is not the
same as slower inflation.
BA 1103 | Chapters 1–2 | ReBoot case
77

77.

REVIEW
Unemployment rate: who is counted?
An economy-wide labor-market indicator.
DEFINITION
IMPORTANT DISTINCTION
The percentage of the labor force who are
unemployed, available for work and
actively seeking employment.
Labor force = employed + unemployed
people actively seeking work.
A full-time student not seeking work is
generally outside the labor force.
BA 1103 | Chapters 1–2 | ReBoot case
78

78.

REVIEW
Economy-wide conditions: do not mix up
ReBoot watches national conditions without mistaking its own sales for macroeconomic data.
INFLATION
DEFLATION
Sustained general price increase throughout the
economy; may reduce purchasing power.
Sustained decrease in average prices across the
economy, NOT merely one discounted laptop.
UNEMPLOYMENT RATE
BUSINESS CYCLES
Percentage of the labor force without a job (and
actively seeking one, per the course context).
Fluctuations in an economy’s growth over a period
of years; expansion and recession are phases.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
79

79.

ORIGINAL
CHAPTER 2
The Meaning of Money (1 of 2)
SLIDE 57
• Money
– Anything generally accepted as a means of
paying for goods and services
– Serves as a medium of exchange, a unit of
accounting, a store of value, and a standard of
deferred value
Money
definition

80.

ORIGINAL
CHAPTER 2
The Meaning of Money (2 of 2)
SLIDE 58
• A medium of exchange
• A unit of accounting
• A temporary store of value
• A standard of deferred payment
Four roles of
money

81.

ORIGINAL
CHAPTER 2
Fiat Money and Cryptocurrency
SLIDE 59
• Fiat money
– Official currencies issued and maintained through
government fiat, or proclamation
• Cryptocurrency
– currency represented by digital tokens
Fiat money +
cryptocurre
ncy

82.

REVIEW
Money: four functions plus cryptocurrency
The exam emphasizes the definition of money, a temporary store of value and cryptocurrency.
FUNCTIONS OF MONEY
CRYPTOCURRENCY
Medium of exchange = pay for a repair.
Digital tokens that rely on cryptography for
security; not the same as government-issued fiat
currency.
Unit of accounting = quote a price.
Temporary store of value = save money for later.
Standard of deferred payment = promise to
repay a loan.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
Do not confuse “digital tokens” with the four
functions of money.
83

83.

ReBoot is growing, but faces six problems at the same time.
REBOOT CHALLENGE 1 | Diagnose the business
APPLICATION • DISCUSS FIRST, THEN CHECK THE ANSWERS
A Replacement-part inflation raises costs and students reduce spending.
B A competing platform offers lower prices and free delivery.
C Students increasingly seek environmentally responsible devices.
D New diagnostic software can automate routine repair checks.
E Government strengthens electronic-waste disposal requirements.
F A returned laptop is defective and its replacement part is delayed.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
84

84.

REVIEW
CHALLENGE 1 | Detailed answer key
The same problem can involve several functions or environments; state your primary classification and justify it.
A • ECONOMIC
B • MARKET
C • SOCIAL
Inflation and falling purchasing
power affect broad costs and
consumer behavior. Finance
examines margins and pricing;
operations reviews sourcing.
A specific competitor and its
offer are in the market
environment. Marketing
evaluates positioning;
operations/logistics review
delivery speed.
Changing sustainability
preferences are a social trend;
marketing studies demand and
communicates responsible
reuse.
D • TECHNOLOGICAL
E • LEGAL / REGULATORY
F • MULTIPLE FUNCTIONS
Science-based diagnostic
innovation changes processes.
IT/R&D evaluate the tool;
operations pilots it; HR plans
training.
Government disposal
requirements create compliance
obligations. Operations and
specialist business/legal services
plan safe handling.
Operations identifies and repairs
the defect; logistics sources the
part; customer support
communicates; finance assesses
costs; R&D prevents recurrence.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
85

85.

ReBoot has ₺100,000: it can buy extra stock OR a diagnostic machine, not both.
REBOOT CHALLENGE 2 | Make an economic decision
APPLICATION • EXPLAIN THE REASONING
1 Explain scarcity → decision → trade-off → opportunity cost.
2 ReBoot reduces its laptop price. What happens to quantity demanded?
3 New repair technology reduces unit costs. Movement or shift?
4 Which measure tracks national production: GDP, CPI or PPI?
5 Which term describes two consecutive quarters of falling GDP?
6 A regional water supplier is the only provider and tariffs are controlled. What kind of monopoly?
BA 1103 • Chapters 1–2 • Concepts, choices, and application
86

86.

REVIEW
CHALLENGE 2 | Detailed answer key (Part 1)
The WHY matters more than merely naming the term.
1 • CHAIN OF CHOICE
2 • DEMAND: MOVEMENT
3 • SUPPLY: SHIFT
Scarcity: ₺100,000 cannot fund
both. Economic decision:
allocate scarce funds. Trade-off:
select inventory OR machine.
Opportunity cost: value of the
best rejected option, not the
cash price of the selected option.
ReBoot cuts its own price. Other
things constant, the quantity
demanded generally rises: a
movement along the existing
downward-sloping demand
curve, not a demand-curve shift.
New technology lowers
production/repair cost. At the
same price, the firm can supply
more: a rightward supply-curve
shift. A product’s own price
change would instead cause
movement along the curve.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
87

87.

REVIEW
CHALLENGE 2 | Detailed answer key (Part 2)
A monopoly can be subject to regulation; “regulated” does not make it an oligopoly.
4 • GROSS DOMESTIC
PRODUCT (GDP)
GDP is the value of final goods
and services produced within a
nation’s borders. CPI tracks
consumer-basket prices; PPI
tracks prices at the producer
stage. Neither is a measure of
total output.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
5 • RECESSION
For the course definition, two
consecutive quarters of falling
Gross Domestic Product
constitute a recession. Business
cycles refer to recurring broad
economic fluctuations; recession
is one phase.
6 • REGULATED
MONOPOLY
One supplier serves the regional
water market = monopoly.
Government control of its
tariffs/operations makes it a
regulated monopoly. Contrast
oligopoly (few sellers) and
monopolistic competition (many
differentiated sellers).
88

88.

REVIEW
FINAL CHECK | Be able to explain these distinctions
BA 1103 • ONE STORY, TWO CHAPTERS
CHAPTER 1
Business → business model → revenue and profit → adding value → competitive
advantage → risk → environments → functions and stakeholders.
CHAPTER 2
Scarcity → decision → trade-off → opportunity cost → factors → GDP/CPI/PPI →
systems and policy → demand/supply → competition → business cycles →
money.
Explain a concept with a ReBoot example, then distinguish it from the nearest alternative.
BA 1103 • Chapters 1–2 • Concepts, choices, and application
89