business Flashcards
A ________ _________ sets out the purpose and general direction for the organization?
mission statement
Who are organizational stakeholders?
Government
Customers
Suppliers
Bank
Employees
Stockholders
‘Ethics deals with the right actions of Individuals’- Who said this?
P F Drucker
a situation in which a business spends more money than it earns
loss
the money earned by an employee, esp. when paid for the hours worked
wage
the amount of money for which something is sold
price
the collection and examination of information about things that people buy or might buy and their feelings about things that they have bought
market research
all the types of products that a company or store sells
product range
someone who establishes an organization
founder
Document that describes a new business & a strategy to launch that business
business plan
How a company is organized, which impacts things like legal and tax liability of owners
business structure
An individual who undertakes the creation, organization, and ownership of a business
entrepreneur
The act of setting up a business with the goal of making profit
entrepreneurship
A product, service, business model, or strategy that’s both new and useful
innovation
A brief speech that defines a person, process, product, service, organization, or event and its value
pitch
Money that is left after all the expenses of running a business have been deducted from the income
profit
A type of young business that develops a unique product or service and bring it to the market
startup
A business entity that is separate and distinct from its owners
corporation
A business structure in the U.S. that protects its owners from personal responsibility for its debts or liabilities
Limited Liability Company
A formal agreement made by two or more parties to jointly manage and operate a company
partnership
A business that has just one owner who pays personal income tax on profits earned from the business
sole proprietorship
A business organized for purposes other than generating profit
nonprofit
The set of moral principles that guides a company’s conduct
business ethics
Ability to adapt, willingness to change
flexibility
Transferring ownership to people who already operate the business
Management Buyout
A business owner sells ownership to a retirement fund for the employees
Employee Stock Ownership Plan (ESOP)
Dividing ownership of a privately held company into shares sold to the public
Initial Public Offering (IPO)
Social science that deals with the study of the production, consumption, distribution of goods and services and the transfer of wealth to obtain those goods and services.
economics
the study of how individuals and nations make choices about ways to use scarce resources to fulfill their needs and wants
economics
a situation in which unlimited wants exceed the limited resources available to fulfill those wants
scarcity
giving up one thing in favor of another
trade-offs
the highest-valued alternative that must be forgone when a choice is made
opportunity costs
the additional satisfaction or benefit received when one more unit is produced
marginal benefit
the cost of producing one more unit of a good.
marginal cost
decision on how to divide scarce resources among different uses
allocation of resources
tangible products that we use to satisfy our wants and needs
goods
actions or activities that one person performs for another
services
land, labor, capital, entrepreneurship
factors of production
Buildings, machines, technology, and tools needed to produce goods and services.
capital goods
Buildings, machines, technology, and tools needed to produce goods and services.
human capital
people who buy goods and services
consumers
individuals and organizations that determine what products and services will be available for sale.
producers
To exchange goods or services without the use of money
barter
A graphical representation that shows the possible combinations of two products that an economy can produce, given that its productive resources are fully employed and efficiently used.
production possibilities curve
the process of dividing work into specialized jobs that are performed by separate individuals
division of labor
Production method that breaks down a complex job into a series of smaller tasks
assembly line
The ways in which a society answers the three basic economic questions to organize production, distribution, and consumption of goods and services to solve the economic problem of scarcity
economic system
3 basic economic questions
Every economic system must answer the three basic economic questions: What to produce; How to produce it? For whom to produce?
a system in which the central government makes all economic decisions
command economy
An economy in which production is based on customs and traditions and economic roles are typically passed down from one generation to the next–usually subsistence agriculture
traditional economy
a system based on private ownership, free trade between buyers and sellers, and competition
market economy
market-based economic system with limited government involvement.
mixed economy
a term coined by Adam Smith to describe the self-regulating nature of the marketplace
invisible hand
the doctrine that states that government generally should have little or no involvement in the marketplace
laissez faire
the ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than other producers.
comparative advantage
the ability to produce more of a given product using a given amount of resources
absolute advantage
The freedom of private businesses to operate competitively for profit with minimal government regulation.
free enterprise
economic system in which the means of production are privately owned and operated for profit
capitalism
Used to change behavior in order to persuade people to take certain economic actions.
incentives
the role of consumer as the ruler of the market, determining what products will be produced
consumer sovereignty
To be motivated by the desire to make money.
profit motive
property/resources that individuals own and control; a core principle of capitalism
private ownership
the removal of some government controls over a market
deregulation
a rule that a government establishes and enforces to protect the public or provide equal access to specific goods, and services.
government regulation
To change from government or public ownership or control to private ownership or control.
privatization
costs that are not calculated into the price; spillovers
externalities
a measure of quality of life based on the amounts and kinds of goods and services a person can buy
standard of living
labor, technology, machinery, buildings, and other resources used to produce
inputs
goods and services that firms produce; productivity
outputs
the quantity of goods and services produced from each unit of labor input; ratio of output to input
productivity
The transfer of income through government taxation, spending and assistance programs targeted at particular income groups. The goal is to transfer money from higher-income groups to lower-income groups.
redistribution of income
The rights of an individual or business to own, use, rent, invest in, buy, and sell property.
property rights
six broad economic goals
economic efficiency
economic security
economic equity
economic stability
economic freedom
economic growth
This refers to increasing the production of goods and services over time. Economic growth is measured by changes in the level of real gross domestic product (GDP). A target annual growth rate of 3 to 4 percent in real GDP is generally considered to be reasonable and sustainable.
economic growth
refers to such things as the freedom for consumers to decide how to spend or save their incomes, the freedom of workers to change jobs and join unions, and the freedom of individuals to establish new businesses or close old ones.
economic freedom
This refers to maintaining stable prices and full employment and keeping economic growth reasonably smooth and steady. Price stability means avoiding inflation or deflation. Full employment occurs when an economy’s scarce resources, especially labor, are fully utilized.
economic stability
This means what is “fair”. Economic actions and policies have to be evaluated in terms of what people think is right or wrong. Equity issues often arise in questions dealing with the distributions of income and wealth.
economic equity
This refers to protecting consumers, producers, and resource owners from risks that exist in society. Each society must decide from which uncertainties individuals can and should be protected, and whether individuals, employers, or the government should provide or pay for this protection…(health care for elderly; Social Security, disability; unemployment compensation, etc.)
economic security
refers to how well scarce productive resources are allocated to produce the goods and services people want and how well inputs are used in the production process to keep production costs as low as possible.
economic efficiency
“let the buyer beware”
caveat emptor
All else equal - with other conditions remaining the same:
Ex. shorter hours of labor will, ceteris paribus, reduce the volume of output
ceteris paribus
a person who receives the benefit of a good but avoids paying for it
free rider
two main types of economics
microeconomics
macroeconomics
A government agency established in 1914 to prevent unfair business practices and help maintain a competitive economy.
federal trade commission
focuses on the actions of individuals and industries, like the dynamics between buyers and sellers, borrowers and lenders–small segments of the economy
microeconomics
takes a much broader view by analyzing the economic activity of an entire country or the international marketplace.
macroeconomics
often described as the “ father of economics”; the theory about markets was developed by …. wrote An Inquiry into the Nature and Causes of the Wealth of Nations
Adam Smith
19th century philosopher, political economist, sociologist, humanist, political theorist, and revolutionary. Often recognized as the father of communism. Marx believed that communism would replace capitalism. Believed in a classless society.
Karl Marx
English political economist, formulated the idea of comparative advantage—the main basis for support of free trade today. It is based on the idea that a nation produces those goods and services that it has the lowest opportunity cost of producing and trades with other nations for goods and services they can produce at a lower opportunity cost.
David Ricardo
English economist who advocated the use of government monetary and fiscal policy to maintain full employment without inflation
John Maynard Keynes
Public goods and services afre
non-rivalrous
non-excludable
Additional consumption does not add to the cost of production
non-rivalrous
Regardless of who pays for it, one person consuming it; does not deny another person of the right to consume it–streetlights; sidewalks, etc..
non-excludable
way in which the nation’s income is divided among families, individuals, or other designated groups–Wealth inequality in the U.S. is at its highest levels ever. The top 0.1% own about the same share of wealth as the bottom 90%.
distribution of income
There is no such thing as a free lunch–Everything has a cost–nothing is free.
TINSTAAFL
A “spillover” effect of an action that affects a third party other than the buyer or seller–can be negative (cigarette smoke/pollution) or positive (benefiting from someone’s security system)
EXTERNALITIES
A work or invention that is the result of creativity, such as a manuscript or a design, to which one has rights and for which one may apply for a patent, copyright, trademark, etc.
intellectual property
a market that runs most efficiently when one large firm supplies all of the output–utility companies–electric, gas, nuclear power plants, water, etc.
natural monopoly
Lower production costs as a result of larger volume of production–monopolies and oligopolies have economies of scale
economies of scale
Occurs when two or more sellers offering the same goods and services–competitions keeps prices low and quality high
competition
