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| Flap 2 |
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| 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
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| Law of Supply |
as prices increases, quantity increases
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| 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 |
