Chapter 1

Question 1

What is a business?

Answer 1

An organization that strives for a profit by providing goods and services desired by its customers

Question 2

What are goods?

Answer 2

Are tangible items manufactured by businesses, such as laptops

Question 3

What is a service?

Answer 3

intangible offerings of businesses such as Physicians, lawyers, hairstylists, car washes, and airlines all provide services.

Question 4

What is “The standard of living”

Answer 4

is measured by the output of goods and services people can buy with the money they have.

Question 5

What is “Quality of life”

Answer 5

The general level of human happiness based on such things as life expectancy, educational standards, health, sanitation, and leisure time.

Question 6

What is risk

Answer 6

The potential of losing time and money and not be able to accomplish an organization’s goals.

Question 7

What are costs

Answer 7

Are expenses a company incurs from creating and selling goods such as rent, salaries, supplies, transportation etc.

Question 8

What is profit?

Answer 8

If a company has money left over after paying its expenses this is considered a profit

Question 9

What is the direct relationship b/w risk & profit

Answer 9

the greater the risks, the greater the potential for profit (or loss).

Question 10

What is a not-for-profit organization

Answer 10

an organization that exists to achieve some goal other than the usual business goal of profit. eg hospital

Question 11

What is Economics

Answer 11

the study of how individuals, businesses, governments and nations allocate their limited resources to satisfy their unlimited wants and needs. The allocation of resources is concerned with the production, distribution, and consumption of goods and services.

Question 12

What are Resources

Answer 12

resources are the inputs used to produce outputs such as land and other natural resources, labour (mental/physical), capital including buildings/equipment, entrepreneurship, and knowledge

Question 13

What is labour

Answer 13

it transforms raw materials into goods and services.

Question 14

What is capital

Answer 14

Capital is needed for production processes such as (equipment, buildings, vehicles, cash, etc.

Question 15

What is the importance of Entrepreneurship?

Answer 15

provides the skill, drive, and creativity needed to bring resources together to produce a good or service to be sold to the marketplace.

Question 16

What is the term used to describe a business using resources to produce things

Answer 16

resource factors of production

Question 17

What is an Output & Input market?

Answer 17

Households provide businesses with labour (workers), land and buildings (landlords), and capital (as investors). Businesses then pay households for these resources through (wages, rent, interest). The resources obtained by the households are then used by businesses to produce goods/services which are sold to businesses with revenue. The revenue obtained is then used to buy additional resources

Question 18

What is an economic system?

Answer 18

Businesses taking into account:

1. How to allocate limited resources: considers the factors of production and how to best satisfy unlimited societal needs
2. What goods and services to produce and in what quantities
3. How and by whom these goods and services are produced
4. How to distribute goods and services to consumers

Question 19

What is Capitalism

Answer 19

is based on competition in the marketplace and private ownership of factors of production (resources). , and the government does not try to set prices or coordinate economic activity.

Question 20

What does a capitalist system guarantee?

Answer 20

The right to own property, the right to make a profit, the right to make free choices, and the right to compete. The main incentive in this system is profit, which encourages entrepreneurship.

Question 21

Why is competition good in capitalism

Answer 21

It leads to better and more diverse products, keeps prices stable, and increases the efficiency of producers. Companies try to produce their goods and services at the lowest possible cost and sell them at the highest possible price. But when profits are high, more businesses enter the market to seek a share of those profits. The resulting competition among companies tends to lower prices.

Question 22

What is Communism

Answer 22

The government owns virtually all resources and controls all markets.

Question 23

How is economic decsions making based in communism?

Answer 23

the government, rather than the competitive forces in the marketplace, decides what will be produced, where it will be produced, how much will be produced, where the raw materials and supplies will come from, who will get the output, and what the prices will be (China)

Question 24

What is socialism

Answer 24

an economic system in which the basic industries are owned by the government or by the private sector under strong government control. (UK, India). There is high taxation and the government redistributes income.

Question 25

What are the most common economic systems

Answer 25

capitalism, communism, socialism, mixed economy

Question 26

What does a socialist state control?

Answer 26

A socialist state controls critical, large-scale industries such as transportation, communications, and utilities. Smaller businesses and those considered less critical, such as retail, may be privately owned. The state also determines the goals of businesses, the prices and selection of goods, and the rights of workers.

Question 27

What do socialist countries provide

Answer 27

Socialist countries typically provide their citizens with a higher level of services, such as health care and unemployment benefits, than do most capitalist countries

Question 28

What is mixed economic system

Answer 28

They use more than one economic system. Sometimes, the government is basically socialist and owns basic industries.

Question 29

What are the factors of production owned by a mixed economy?

Answer 29

are owned by the government which include public lands, the postal service, and some water resources. But the government is extensively involved in the economic system through taxing, spending, and welfare activities.

Question 30

What does a mixed economy attempt to achieve

Answer 30

any social goals—income redistribution and retirement pensions, for example—that may not be attempted in purely capitalist systems.

Question 31

What are the features of Canada’s mixed economy?

Answer 31

The federal government controls some basic services, such as the postal service and air traffic control. The Canadian economy also has some characteristics of a socialist system, such as providing social security retirement benefits to retired workers or free health care to its population.

Question 32

What is economics?

Answer 32

The study of how individuals, businesses, government, and nations allocate their limited resources to satisfy their unlimited wants and needs.