Business Ethics Ch 4
Business Ethics
Concepts & Cases
Manuel G. Velasquez
Copyright © 2012 Pearson Education, Inc. All rights reserved.
Chapter Four
Ethics in the Marketplace
Copyright © 2012 Pearson Education, Inc. All rights reserved.
Definition of Market
• A forum in which people come together to exchange ownership of goods; a place where goods or services are bought and sold.
Copyright © 2012 Pearson Education, Inc. All rights reserved.
Three Models of Market Competition
• Perfect competition
– A free market in which no buyer or seller has the power to significantly affect the prices at which goods are being exchanged.
• Pure monopoly
– A market in which a single firm is the only seller in the market and which new sellers are barred from entering. • Oligopoly
– A market shared by a relatively small number of large firms that together can exercise some influence on prices. Copyright © 2012 Pearson Education, Inc. All rights reserved.
Equilibrium in Perfectly
Competitive Markets
• Equilibrium point: In a market, the point at which the quantity buyers want to buy equals the quantity sellers want to sell, and at which the highest price buyers are willing to pay equals the lowest price sellers are willing to take.
• Principle of diminishing marginal utility: generally each additional unit of a good a person consumes is less satisfying than each of the earlier units the person consumed.
• Principle of increasing marginal costs: after a certain point, each additional unit a seller produces costs more to produce than earlier units.
Copyright © 2012 Pearson Education, Inc. All rights reserved.
Supply and Demand Curves
• Supply curve: A line on a graph indicating the quantity of a product sellers would provide for each price at which it might be selling; the supply curve also can be understood as showing the price sellers must charge to cover the average costs of supplying a given amount of a product.
Copyright © 2012 Pearson Education, Inc. All rights reserved.
Supply and
Concepts & Cases
Manuel G. Velasquez
Copyright © 2012 Pearson Education, Inc. All rights reserved.
Chapter Four
Ethics in the Marketplace
Copyright © 2012 Pearson Education, Inc. All rights reserved.
Definition of Market
• A forum in which people come together to exchange ownership of goods; a place where goods or services are bought and sold.
Copyright © 2012 Pearson Education, Inc. All rights reserved.
Three Models of Market Competition
• Perfect competition
– A free market in which no buyer or seller has the power to significantly affect the prices at which goods are being exchanged.
• Pure monopoly
– A market in which a single firm is the only seller in the market and which new sellers are barred from entering. • Oligopoly
– A market shared by a relatively small number of large firms that together can exercise some influence on prices. Copyright © 2012 Pearson Education, Inc. All rights reserved.
Equilibrium in Perfectly
Competitive Markets
• Equilibrium point: In a market, the point at which the quantity buyers want to buy equals the quantity sellers want to sell, and at which the highest price buyers are willing to pay equals the lowest price sellers are willing to take.
• Principle of diminishing marginal utility: generally each additional unit of a good a person consumes is less satisfying than each of the earlier units the person consumed.
• Principle of increasing marginal costs: after a certain point, each additional unit a seller produces costs more to produce than earlier units.
Copyright © 2012 Pearson Education, Inc. All rights reserved.
Supply and Demand Curves
• Supply curve: A line on a graph indicating the quantity of a product sellers would provide for each price at which it might be selling; the supply curve also can be understood as showing the price sellers must charge to cover the average costs of supplying a given amount of a product.
Copyright © 2012 Pearson Education, Inc. All rights reserved.
Supply and