Chapter 1 Flashcards
GDP
Total value of all goods and services produced by all people within a country during a one year period
Four crucial management skills
Interpersonal
Analytical
Technical
Conceptual
Productivity
Average Output per worker per hour
Founder of capitalism
Adam Smith
Define business
Organized effort of individuals to produce and sell for a profit goods and services that satisfy society’s needs
Four things needed for business
Human resources
Informational resources
Material resources
Financial resources
What is the relationship between sale revenue and profit
Profit remains when expenses have been deducted from revenue
A loss occurs when
Costs exceed a businesses revenue
What kind of economy does the U.S. Have
Mixed economy
Both socialism and capitalism are represented
Households serve as
Consumers
Resource owners of some factors of production
Governments role In The economy
Fun exchange for taxes governments provide public services that would not be provided by business or would be produced only for those who could afford them
Oligopoly
Few sellers, size able investment, each seller has considerable control over the price, actions of one seller can have a strong effect on the other competitors
Perfect/pure competition
Many buyers and many sellers, no one seller or buyer is powerful enough to effect there price
Monopoly
Only one seller
Natural Monopoly
Industry requiring huge investment, duplication of facilities would be a wasteful use of resources and would not be in public interest
Define inflation
Rise in the levels of prices
Deflation
Decline in prices
Factors of production
Resources needed to produce goods and services
Invisible hand
A term used to describe how individual’s personal gain benefits others and a nations economy
Adam smith
Steak holder
All people effected by an organizations policy decisions and activities
Free enterprise
System of business in which individuals are free to decide what to produce, how to produce it and at what price to sell it
Economy
The way i. Which people deal with the creation and distribution of wealth
Microeconomics
Individuals and business
Macroeconomics
National economy and global
Capitalism
An economic system in which individuals own and operate the majority of businesses that provide goods and services
Factors of production
The resources needed to produce goods and services
System of business where individuals are free to decide what to produce, how to produce it and at what price to sell it
Free enterprise
Four major economic systems
Communism
Socialism
Capitalism
Mixed economy
Political and economic theory of social organization that advocates the means of production distribution and exchange should be regulated by the community as a whole
Socialism
A political theory derived from Karl Marx, advocating class war and lead to a society in which all property is publicly owned and each person works and is paid according to their abilities and needs
Communism
Two or more consectutive three month periods of decline In GDP
Recession
Depression
A severe recession that lasts longer than typical, and has a larger decline in business activity when compared to a recession
Government influence on the amount of savings and expenditures accomplished by altering tax structure and by changing the levels of government spending
Fiscal policy
Federal reserves decisions that determaim the size of the supply of money in the nation and the level of interest rates
Monetary policy
Fluctuations in economic growth
The reoccurrence of periods of growth and recession in a nations economy
Business cycle
Measures prices that producers recurve for their finished goods
Predictor of
Changes in CPI
Prices costomers will pay for everyday nessesities
Producer price index (PPI)
Percent of a nations labor force unemployed at any time
Unemployment rate
An economy that exhibits both elements of both capitalism and socialism
Mixed economy
Government decides what goods and services will be produced
How
For whom
And owns and controls the major factors of production
Command economy
Monthly index that measures the change in prices of a fixed basket of goods by a typical consumer in an urban area
Consumer price index (CPI)
An economic system in which businesses and individuals decide what to produce and buy and the market determains quantities sold and prices
Market economy
Human resources
Informational resources
Material resources
Financial resources
Four things needed for business
A comprehensive report of what an organization has done and is doing with regard to social issues that affect it
Social audit
A plan designed to increase the number of minority employees at all levels within an organization
Affirmative action program
A government agency with the power to investigate complaints of employment discrimination and the power to sue firms that practice it
Equal opportunity commission
Workers with little education or vocational training and long history of unemployment
Hard-core unemployment
The concept that businesses should emphasize not only profits but also the impact of its decisions on society
Socioeconomic model of social responsibility
The view that society will benefit most when business is left alone to produce and market profitable products that society needs
Economic model of social responsibility
A Latin phrase meaning “let the buyer beware “
Caveat emptor
All activities undertaken to protect the rights of consumers
Consumerism
Right to choose, be informed, be heard, safety, consumer education and courteous service
Six basic rights of consumers
The recognition that business activities have an impact on society and the consideration of that impact in business decision making
Social responsibility
Informing the press or government officials about unethical practices within ones organization
Whistle blowing
Provides sweeping new legal protection for employees who report corporate misconduct
sarbanes Isley act of 2002
When a business person take advantage of a situation for his or her own personal interest rather than for the employers interest
Conflict of interest
The application of moral standards to business situations
Business ethics
The online interaction that allows people and businesses to share ideas personal information and information about products or services
Social media
An economy in which more effort is devoted to the production of services that to that of goods
Service economy
A method of manufacturing in which an entrepreneur distributes raw materials to various homes , where families process them into finished goods to be offered for sale by the merchant entrepreneur
Domestic system
A loose subjective measure of how well off an individual or a society is mainly in terms of want satisfaction through goods and services
Standard of living
The separation of a manufacturing process into distinct tasks and the assignment o a different task to different individuals
Specialization
A system of manufacturing in which all materials, machinery and workers required to manufacture a product are assembled in one place
Factory system
A market I. Which there are few sellers
Oligopoly
The process of developing and promoting differences between ones products and all competitive products
Product differentiation.
A market situation in which there are many buyers along with a relatively large number of sellers who differentiate their products from the products of competitors
Monopolistic competition
The quantity of a product that buyers are willing to purchase at each various price
Demand
The quantity of a product that producers are willing to sell at each of various prices
Supply
The price at which the quantity demanded is exactly equal to the quantity supplied
Market price
These let situation in which there are many buyers and sellers of a product and no one buyer or seller is powerful enough to affect the price of that product
Perfect or pure competition
General rise in the level of prices
Inflation
General decrease in the level of prices
Deflation
The recurrence or periods of growth and recession in a nations economic activity
Business cycle
The average level of output per worker per hour
Productivity
Goods and services purchased by individuals for personal consumption
Consumer products
An economic system in which the government decides what goods and services will be produced, how they will be produced, for whom available goods and services will be produced and who owns and controls the major factors of production
Command economy
An economic system in which businesses and individuals decide what to produce and buy and the market determines quantities sold and prices
Market economy
An economic system I. Which the individuals own and operate the majority of businesses that provide goods and services
Capitalism
A term created by Adam smith to describe how am individuals personal gain benefits others and a nations economy
Invisible hand
The way in which people deal with the creation and distribution of wealth
Economy
Resources used to produce goods and services
Factors of production
The study of how wealth is distributed and created
Economics
The organized effort of individuals to produce and sell for a profit the goods and services that satisfy society’s needs
Business
What remains after all business expenses have been deducted from sales revenue
Profit
Differences among people in a workforce owning to race ethnicity and gender
Cultural or workplace diversity
All activitys undertaken to protect the rights of consumers
Consumerism
The ability to produce a specific product more efficiently than any other nation
Absolute advantage
All business activities that involve exchanges accross national borders
International business
The ability to produce a specific product more efficiently than and other product
Comparative advantage
Selling and shipping raw materials or products to other nations
Exporting
Purchasing raw materials or products in other nations and bringing them into ones own country
Importing
The total value of a nations exports minus the total value of its imports over some period of time
Balance of trade
A negative balance of trade
Trade deficit
The total flow of money into a country minus the total flow of money out of that country over some period of time
Balance of payments
A tax levies on a particular foreign product entering a country
Import duty
Exportation of large quantities of a product at a price lower than that of the same product in the home market
Dumping
A nontax measure imposed by a government to favor domestic over foreign suppliers
Nontariff barriers
A limit on the amount of a particular good that may be imported into a country during a given period of time
Import quota
A complete halt to the trading with a particular nation or in a particular product
Embargo
A restriction on the amount of a particular foreign currency that can be purchased or sold
Foreign-exchange control
The reduction of the value of a nations currency relative to the currencies of other nations
Currency devaluation
An international organization of 159 nations dedicated to reducing or eliminating tariffs and other barriers to world trade.
General agreement on tariffs and trade
GATT
Powerful successor to GATT that incorporates trade in good services and ideas
World trade organization WTO
An organization on Omarion’s formed to promote the free movement of resources and products among its members and to create common economic policies
Economic community
A contractual agreement in which one firm permits another to produce and market its product and use its brand name in return for a royalty or other compensation
Licensing
Issued by a bank on request of an importer stating that the bank will pay an amount of money to a stated beneficiary
Letter of credit
Document issued by a transport carrier to an exporter to prove that merchandise has been shipped
Bill of lading
Issued by an exporters bank, ordering the importers bank to pay for the merchandise, thus guaranteeing payment once accepted by the importers bank
Draft
A partnership formed to create a competitive advantage on a worldwide basis
Strategic alliance
Provides a link between buyers and sellers in different countries
Trading company
Provides and link between buyers and sellers in different countries
Trading company
An international barter transaction
Countertrade
A firm that operate s on a worldwide scale without ties to any specific nation or region
Multinational enterprise
An independent agency of the U.S. Government whose function is to assist in financing the exports of American firms
Export-import bank of the United States
An internationally supported bank that provides loans to developing countries to help them grow
Multilateral development bank
An international bank with 188 member nations that makes short term loans to developing countries experiencing balance of payment deficits
International Monetary Fund
Import quota
A limit on the amount of a particular good that may be imported during a given time
NAFTA
North American free trade agreement
OPEC
Organization of petroleum exporting countries est. 1960
A partnership formed to achieve a specific goal or to operate for a specific period of time
Joint venture
Production or marketing facilities developed by a firm in one or more foreign nations
Totally owned facilities
Advantages of a joint venture
Immediate marketing knowledge
Reduced risk
Control over product attributes
Disadvantages of a joint venture
Complexity of establishing agreements accross national borders
High level of commitment required of all parties involved
Advantages and disadvantage of totally owned facilities
Complete control of operations
Disadvantage: risk is greater
Imposed to protect a domestic industry from competition by keeping the prices of imports at or above the price of domestic products
Protective tariff
