chapter 1 Flashcards
what is the relationship of businesses’ profit to risk assumption?
Profit is money a business earns above and beyond the money that it spends for salaries and other expenses. Business people make profit by taking risk. Risk is possibly losing time or money.
what does it mean when a company has a loss occur?
when the costs and expenses are higher than its revenues
who are stakeholders?
Stakeholders include customers, employees, stockholders, suppliers, dealers, bankers, the media, people in the local community, environmentalists and elected gov leaders
what are the five elements of the business environment?
economic and legal, technological, competitive, social, and global and business environment
how can the legal and economic system encourage entrepreneurs to take the risks of starting a business?
the gov can do this by allowing private ownership of business and passing laws that enable business people to write contracts that are enforceable in court
what are some ways businesses meet and beat competitition?
- focusing on high quality products
- understanding customers needs and wants
3.establish strong relationships with suppliers - differentiate themselves from their competitors
what are some of the factors in the global environment that affect business?
trade agreements, international economic conditions, war and terrorism, climate change, etc…
what is economics?
the study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals
what are 2 branches of economics?
macroeconomics(studies the operation of a nations economy as a whole)
microeconomics(studies the behavior of people and organizations in particular markets)
what are the 5 factors of production?
land, labor, capital, entrepreneurship and knowledge
what is socialism?
an economic system based on the premise that some businesses should be owned by the government
