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Economics for Leaders

Economics for Leaders. Lesson 6: Incentives, Innovation & the Role of Institutions. How Was The Fashion Show?. Incentives & the Entrepreneur. How do incentives motivate entrepreneurial activity? Do it if…… MB > MC. Climbing Out on a Limb (Risk).

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Economics for Leaders

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  1. Economics for Leaders Lesson 6: Incentives, Innovation & the Role of Institutions

  2. How Was The Fashion Show?

  3. Incentives & the Entrepreneur • How do incentives motivate entrepreneurial activity? • Do it if…… • MB > MC

  4. Climbing Out on a Limb (Risk)

  5. Climbing Out on a LimbIncentivesMB > MC ?

  6. Climbing Out on a LimbIncentivesMB > MC ?

  7. Climbing Out on a LimbIncentivesMB > MC ?

  8. Climbing Out on a Limb Incentives MB > MC ? Profit

  9. People engage in risky behavior based on the expectation of earning a profit. Competition between producers drives prices down, squeezing profits. Competition between producers leads to innovation and improves quality. PROFIT is the MOTIVATOR. COMPETITION is the REGULATOR. Production & Competition

  10. Makin’ Muffins

  11. Makin’ Muffins MB > MC ?

  12. Makin’ Muffins Lots of stuff for YOU!

  13. Makin’ Muffins MB > MC ?

  14. Makin’ Muffins No stuff for YOU!

  15. Makin’ Muffins

  16. Makin’ Muffins Lots of stuff for YOU!

  17. Makin’ Muffins + = Entry & Innovation =

  18. Makin’ Muffins: Entry + = More Entry & Innovation =

  19. Makin’ Muffins + And More Entry & Innovation =

  20. The Story of Ernő Rubik Institutions Matter!

  21. Let’s Play! The Lollipop Game

  22. People engage in risky behavior based on the expectation of earning a profit. The entrepreneur is the residual claimant. Competition between producers drives prices down, squeezing profits. Competition between producers leads to innovation and improves quality. Big Ideas

  23. Resources chase profit (entry) Resources run away from loss (exit) PROFIT is the MOTIVATOR COMPETITION is the REGULATOR INSTITUTIONS MATTER! Big Ideas

  24. Where there is no risk, there can be no pride in achievement! Quote of the Day WHO said this?

  25. Where there is no risk, there can be no pride in achievement! Residual Claimant gets profit for taking risk. PROFIT is the MOTIVATOR. COMPETITION is the REGULATOR. Quote of the Day Ray Kroc

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