Business - Economic Foundations Flashcards
Supply
The amount of a good or service that producers are willing to make and sell
Demand
The amount of a good or service that consumers are willing to purchase
Mixed Economy
An economy in which there are elements of both public and private enterprise.
Innovation
Something new or different introduced.
Sole Proprietorship
A business owned and operated by a single person
Corporation
A business that exists as its own identity
Partnership
A business that is owned and operated by two people
Trade agreement
a commercial treaty between two or more nations
Equilibrium
The quantity demanded equals the quantity supplied
Co-operative
Owned by its workers or members who buy from the business [shareholders]
Franchise
When a business licenses another to use its name, operating procedure, etc. under an above form of ownership
Profit business
A business that produces or sells goods/services to satisfy the needs, wants, and demands of consumers to make a profit
PROFIT = REVENUE - EXPENSES
Non-Profit business
Operate strictly to help people in a community
Raise funds for a specific goal
Serve people/communities
Charities/charitable organizations
Crown Corporation
A business regulated by a national or local government but structured and operated as a legal corporation
Key Points on Supply
- Represents producers’ willingness to sell
- Affected by price
Key Points on Demand
- Reflects consumers’ desires
- Varies with price
Key Points on Equilibrium
- Where supply and demand curves intersect
- There is no surplus and no shortage
Market-Based Economy
Most goods and services are bought and sold and prices are determined by supply and demand
Law of Supply
As the price of a good or service Increase/Decreases the quantity supplied Increases/Decreases
What happens when supply shifts?
Shift Right: An increase in supply causes the supply curve to shift to the right, lowering the equilibrium price and increasing the equilibrium quantity
Shift Left: A decrease in supply causes the supply curve to shift to the left, raising the equilibrium price and lowering the equilibrium quantity
Law of Demand
As the price of a good or service decreases, the quantity demanded increases.
As the price of a good or service increases, the quantity demanded decreases
Stages of the Business Cycle
- Boom - Major business success and profit
- Recession - Business is starting to fall
- Slum/Depression - Many business failures
- Recovery - The business is coming back
What happens when Demand shifts?
Shift Right: An increase in demand causes the demand curve to shift to the right, raising the equilibrium price and quantity
Shift Left: A decrease in demand shifts the demand curve to the left, lowering the equilibrium price and quantity
How to meet consumer demands
Pricing strategies, Innovation and Customer Engagement
Needs VS Wants
Needs are a necessity for survival and wants are something we’d like to have
Profit VS Non-Profit
Profit business wants to make money and income while a non profit wants to serve the community
How can a business make profit
Reinvest money for expansion
Provide improved goods and services
Give the owner(s) funds to spend on personal needs or wants
