Chapter 1/2

Question 1

Define Business.

Answer 1

A BUSINESS is an organization that provides
GOODS and/or SERVICES to the consumer to
satisfy needs and wants.

Question 2

What is the difference between a good and a service?

Answer 2

GOODS:
Products that we can see and touch that we buy in exchange for money

SERVICES:
Products that we cannot see or touch Assistance given to another person in exchange for money

Question 3

What is the difference between profit and non-profit?

Answer 3

For-Profit Business:
Produces or sells goods/services to satisfy the needs, wants, and demands of consumers for the purpose of a making PROFIT.

Non-Profit Organizations:
raise funds for a specific goal serve people and their communities charities and charitable organizations allowed to raise such funds

Question 4

4. What are the different forms of business ownership? (i.e. sole proprietorship, etc.)

Answer 4

1. sole proprietorship- owned by one person
2. Partnership- owned by two people, shares costs etc
3. Corporation- legal status, with rights, privileges, liabilities for the people that work there and the business can also have stocks or sharing. Important fact: they can be as small as one person business.

Types of corporation

1. Public – publically traded shares
2. Private – no publically traded shares
3. Crown – operated by the government
4. Municipal – towns and cities that are incorporated
5. Co-operative- A business owned by the workers or members who buy the products or use the services that the business offers and not profit.
6. Franchise- The franchiser licenses the rights to its name, operating procedure, designs, and business expertise to another business called the franchisee.
   A franchise agreement can provide the franchisee with:
   * a ready made, fully operational business
   * brand recognition that is appealing to consumers

Question 5

What is the formula for Profit?

Answer 5

Profit = Revenue - Cost

Question 6

What is the difference between needs and wants?

Answer 6

When you want something but don’t need it, it’s a WANT and when you need something, it is a NEED.

Question 7

What are the economic resources also known as? List them.

Answer 7

1. Natural Resources
   ◦ Materials that come from the earth, water or air
   ◦ Examples: Soil, iron, wildlife, agricultural goods, oxygen
2. Human Resources
   ◦ People who work to create goods and services
   ◦ Examples: Farmers, factory workers, teachers, nurses, bankers
3. Capital Resources
   ◦ Items (assets) that last a long time and need substantial financial
   investment to start or run a business
   ◦ Examples: funds, buildings, equipment, tools, trucks

Question 8

What is interdependence?

Answer 8

Businesses are interdependent, which means they rely on the goods and services from a variety of
businesses to satisfy consumer needs and wants.

Question 9

What is supply and demand? How does it affect price?

Answer 9

Demand is the quantity of a good or service that consumers are willing and able to buy at a particular price. Law of demand and its relationship to prices and consumers:

• When prices decrease consumers buy more;
  and demand goes up .
• When prices increase consumers buy less;
  and demand goes down

Supply is the quantity of a good or service that businesses are willing and able to provide within a range of prices that people would be willing to pay. Increasing the quantity supplied as prices increase is called the law of supply.