| Flap 1 | Flap 2 |
| needs | things that are required in order to live |
| wants | things that add comfort and pleasure to life |
| goods | thing that you can see and touch |
| services | activites that are consumed at the same time they are produced |
| economic resources | means through which goods and services are producd |
| factors of production + three types | another word for economic resources, three types: natural, human and capital resources |
| natural resources | raw material supplied by nature |
| human resources | poeple producing goods and services |
| scarcity | not having enough resources to satisfy every need |
| Economic decision-making(steps) | process of choosing which wants among several options will be satisfied(define the problem, identify the choices, evaluate the choices, choose, do your choose, review it) |
| tradeoff | giving up something for something else |
| opportunity cost | cost of the next best thing you did not choose |
| economic question | 1. What goods and services will be produced?
2. How will the goods and services be produced?
3. What needs and wants will be satisfied with the goods and services produced. |
| economic system(4 types) | nation's plan for answering the 3 economic questions(command, market, traditional, mixed) |
| command economy | the resources are owned and controlled by the government |
| market economy | the resources are owned and controlled by the people of the country |
| traditional economy | goods and services are produced the way they have always been done |
| mixed economy | combines elements of the command and market economy |
| capitalism | refers to the private ownership of resources by individuals, rater than by the government |
| private property | means you can own, use or dispose of things of value |
| freedom of choice | means you can make decisions independently and must accept the cosequences of those decisions |
| profit | money left from sales after all cost of opetating a buisness has been paid |
| competition | rivalry amoung buisnesses to sell their goods and services |
| consumer | person who buys and uses good ans services |
| producers | individuals and organizations that determine what products and services will be available for sale |
| demand | quantity of a good or service that consumers are willing and able to buy |
| supply | quantity of a good or service that buisnesses are willing and able to provide |
| competitors | buiness offering very similar products to same customers |
| Law of Demand | as price increases, quantity demand decreases
|
| Law of Supply | as prices increases, quantity increases
|
| Market Price | point where supply and demand are equal |
| Increase in supply or demand | shift to right |
| decrease in supply or demand | shift to left |
| changes in demand | 1. consumer's tastes
2. Income changes
3. Availability of subsitutes |
| changes in supply | 1. Weather
2. Cost of Production
3. More efficient ways to produce goods and services |
| Domestic business | making, buying, and selling of goods and services within a country |
| International Business | refers to business activities needed for creating, shipping, and selling goods and services across national borders (also known as foreign or world trade) |
| Absolute advantage | exists when a country can produce a good or service at a lower cost than other countries |
| Comparative advantage | situation in which a country specializes in the production of a good or service at which it is relatively more efficient |
| Imports | items bought from other countries |
| exports | goods and services sold to other countries |
| balance of trade | difference between a country's total exports and total imports |
| trade surplus | when a country exports(sells) more than it imports(buys) |
| trade deficit | when a country imports more than it exports |
| balance of payments | difference between the amount of money that comes into a country and the amount that goes out |
| positive(favorable) balance of payments | occurs when a country receives more money than it pays out |
| negative (unfavorable) balance of payments | result of a country sending more money than it brings in |
| exchange rate | value of a currency in one country compared with the value in another |
| factors affecting currency values | balance of payments, economic conditions, and political stability |
| 4 factors for international business environment | Geography, cultural influences, economic development and political and legal concerns |
| infrastructure | refers to a nation's transportation, communication, and utility systems |
| trade barriers | restrictions to free trade |
| formal trade barriers | government trade barriers |
| informal trade barriers | cultural, traditions and religous trade barriers |
| quota | sets a limit on the quantity of a product that may be imported or exported within a given period |
| tariff | tax that a government places on certain imported products |
| embargo | when government stops the export or import of a product completely |
| free-trade zone | selected area where products can be imported duty-free |
| free-trade agreement | member countries agree to remove duties and trade barriers on products traded among them |
| common market | members do away with duties and other trade barriers (also known as economic market) |
| multinational company(MNC) | organization that does business in several countries |
| global strategy | using the same product and marketing strategy worldwide |
| multinational strategy | treats each country market differently |
| Licensing | selling the right to use some intangible property for a fee or royalty |
| franchise | the right to use a company name or business process in a specific way |
| joint venture | afreement between two or more companies to share a buisness project |
| world Trade Organization(WTO) | promotes trade around the world |
| International Monetary Fund(IMF) | helps to promote conomic cooperation |
| World bank | provide economic aid |
| contingent worker | one who has no explicit or implicit contract for long term employment |
| Business Activities | Generating Ideas, Raising Capital, Employing and training Personnel, Buying Goods and Services, Marketing Goods and Services, and Maintaining Business records |
| Producers | create the product and services used by individuals and other businesses |
| intermediaries | businesses involved in selling goods and services of producers to consumer and other businesses |
| service business | carrier out activities that are consumed by its customers |
| proprietorship | business owned and run bu just one person |
| partnership | business owned and controlled bu 2 or more people |
| corporation | separate legal entity formed by documents filed with your state |
| partnership agreement | written agreement among all owners |
| articles of incorporation | written legal document that defines ownership and operating procedures and conditions for the business |
| limited liability partnership | identifies some investors who cannot lose more than the amount of their investment, but are not allowed to participate in the day-to-day activities |
| S-corporation | offers the limited liability of a corporation |
| limited liability company | provides liability protection for owners |
| nonprofit organization | group of people who work together to benefit the community |
| franchise | written contract granting permission to operate a business to sell products and services in a set way |
| mission statement | short, specific written statement of the reason a business exists and what is wants to achieve |
| policies | guidelines used in making consistent decisions |
| procedures | descriptions of the way work is to be done |
| organization chart | shows the structure of an organization, classifications of work and jobs, and the relationships among those classifications |
| functional organization structure | work is arranged within main business functions such as production, operations, marketing, and human resources |
| matrix organizational structure | work is structured around specific projects, products, or customer groups |
