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Business Test 1
Question | Answer |
---|---|
Business | All profit-seeking activities and enterprises that provide goods and services to an economic system |
Profits | Rewards for businesspeople who take the risks involved to offer goods and services to customers. |
Four Sources of Production | -Capital Paid for with interest -Labor Paid for with Wages - Entrepreneurs Paid for with profits - Natural Resources Paid for with Rent |
Foundations of Capitalism | Private Property, Competition, Profits, Freedom of Choice, Limited Role of Government, Self Interest |
Entrepreneurship | The Willingness to take risk to create and operate a business. |
capitalism | Economic system that rewards firms for their ability to perceive and serve the needs and demands of the consumers; also called the Private Enterprise System. |
Branding | Process of creating an identity in consumers' minds for a good, service, or company; a major marketing tool in contemporary business. |
Outsourcing | Using outside vendors to produce goods or fulfill services and functions that were preciously handled in-house or in-country. |
Offshoring | Relocatoin of Business Processes to lower-cost locations overseas |
Communism | A political theory derived from Karl Marx, advocating class war and leading to a society in which all property is publicly owned and each person works and is paid according to their abilities and needs. |
Economics | The science which studies human behavior as a relationship between ends and scarce means which have alternative uses. |
Microeconomics | A branch of economics that focuses on how human behavior effects the conduct of affairs within narrowly defined units, such as individual households or business firms. |
Macroeconomics | The branch of economics that focuses on how human behavior effects the outcomes in highly aggregated markets, such as the markets for labor or consumer products. |
Law of Demand | A principle that states there is an inverse relationship between the price of a good and the quantity of it buyers are willing to purchase. As the price of a good increases, consumers will wish to purchase less of it. As the price falls people want more. |
Law of Supply | A principle that states there is a diect relationship between the price of a good and the quanitity of it producers are willing to supply. As the price of a good increasees, producers will wish to supply more of it. and vice versa. |
Changes in Quantity Demanded | 1. Change in Consumer Income 2. Changes in Number of Consumers 3. Changes in the Price of a related good. 4. Changes in consumer taste and preferences 5. Changes in consumer expectation 6. Demographic Changes |
Changes in Quantity Supplied | 1. Change in Recourse Prices 2. Changes in Technology 3. Elements of Nature and Political Disruptions 4. Tax Changes |
Types of Competition | Grid 3.3 pg 79 |
Dividends | A sum of money paid regularly (typically quarterly) by a company to its shareholders out of its profits (or reserves). |
Board of Directors | Elected by shareholders to represent them in the running of the business. |
GDP | Gross Domestic Product. Sum of all goods and services produced within a country's boundaries during a specific time period, such as a year. Currently 14.12 Trillion. |
Inflation | Rising prices cuased by a combination of excess consumer demand and increases in the costs of raw materials, component parts, human resources, and other factors of production. 3.6% in 2011 |
Unemployment Rate | Percentage of the total workforce actively seeking work but are currently unemployed. 9.4% currently |
Types of Unemployment | Table 3.6 pg 91 |
Monetary Policy | Government actions to increase or decrease the money supply and change banking requirements and interest rates to influence bankers willingness to make loans. |
Fiscal Policy | Government spending and taxation decisions designed to control inflation, reduce unemployment, improve the general welfare of citizens and encourage economic growth. |
Budget Deficit | Situation in which the government spends more than the amount of money it raises through taxes. Estimated 1.1 Trillion in 2012 |
National Debt | Money owed by the government to individuals, business, and government agencies who purchase treasury bills, Treasury notes and Treasury Bonds sold to cover expendatures. 14.7 Trillion |
Small Business | Independent business with fewer than 500 employees, not dominant in it's market. |
SBA | Small Business Administration - Principal government agency concerned with helping small U.S. firms. |
Franchising | Contractual business arrangement between a manufacturer or other supplier, and a dealer such as a restaurant operator or retailer |
Sole Proprietorship | Business ownership in which there is no legal distinction between the sole proprietor's status as an individual and his or her status as a business owner. |
Partnership | Association of two or more persons who operate a business as co-owners by voluntary legal agreement |
Corporation | A legal organization with assets and liabilities separate from those of it's owners. |
Non-Profit Organization | Organization whose goals do not include pursuing a profit. 1. No income tax 2. Regulations on what i takes to be a non profit - They are required to reinvest. |
Merger | Agreement in which two or more firms combine to form one company |
Vertical Merger | Merger that combines firms operating at different levels in the production and marketing process. |
Horizontal Merger | Merger that Joins firms in the same industry for the purpose of diversification, increasing customer bases, cutting cost, or expanding product lines. |
Conglomerate Merger | Merger that combines unrelated firms usually with the goal of diversification, spurring sales growth, or spending a cash surplus in order to avoid a takeover attempt. |
Joint Venture | Partnership between companies formed for a specific undertaking. |
Limited Liability | Your financial obligation/risk is limited to what you invested. |
LLC | Avoiding double taxation but still large. |
United States Population | 307,000,000 |