Chapter 1 and 2 Flashcards
What are individuals able to do in a free enterprise?
-Decide what to produce
-How to produce it
-What price to sell it for
What are the four fundamental questions in business?
-What to produce?
-How to produce?
-For what to produce?
-Who controls the factors of production?
What does it take to succeed in business?
-Have a dream (know what you want)
-adapt to changes in the environment (work hard to turn your dreams into reality)
-Write down your goals
What is a business?
The organized effort of individuals to produce and sell, for a profit, the goods and services that satisfy society’s needs.
What four resources does a business need?
-Human resources
-Material resources
-Informational resources
-Financial resources.
What is an e-business?
A business that is online. (An accepted method of conducting business and a way for businesses to increase sales and profits and reduce expenses)
What is economics?
The study of how wealth is created and distributed.
What is microeconomics?
the study of the decisions made by individuals and businesses.
what is macroeconomic
the study of national and global economics.
What are the factors of production?
-land and natural resources
-labor
-capital
-entrepreneurship
What is an entrepreneur?
A person who risks the time, effort, and money to start and operate a business.
What is the economy?
the system through which a society creates and distributes wealth.
What is Capitalism?
An economy which individual own and operate the majority of businesses that provide goods and services.
who created capitalism?
Adam Smith who created Laissez-faire which had societies best interest with an invisible hand controlling it. Individuals pursuing their own self-interest.
Lassez-faire capitalism
-right to create wealth
-right to own private property and resources
-right to economic freedom and freedom to compete
-right to limited government intervention
What type of business is the U.S.
A mixed economy. has factors of capitalism and socialism
What are the three groups in a mixed economy?
Households
businesses
government
command economy
the government decides what will be produced, hit it will, who gets what, and who owns and controls the factors of production (socialism).
What is the goal with socialism?
to eliminate poverty.
what is communism?
All factors of production are owned and controlled by the government as proxy for ownership by all citizens. States needs >individual needs
Productivity
the average level of output per worker per hour
Gross Domestic Product (GDP)
the total value of all goods and services produced by all people within the boundaries of a country during a one-year period.
inflation
a general rise in the level of prices
deflation
a general decrease in the level of prices
Unemployment rate
the percentage of a nation’s labor force unemployment at any time.
Consumer price index (CPI)
a monthly index that measures the change in prices of a fixed basket of goods purchased by a tropical consumer in an urban area.
Producer Price Index (PPI)
an index that measures prices the producers receive for their finished goods
Balance of trade
the total value of a nations exports minus the total value of its imports over a specific period of time.
consumer confidence index
a measure of how optimistic or pessimistic consumers are about the nations economy. reported monthly basis
corporate profits
the total amount of profits made by corporations over selected time periods
national income
the total income earned by various segments of the population, including employees, self-employed individuals, corporations, and other types of income
new housing rate
the total number of now homes started during a specific time period
prime interest rate
the lowest interest rate that banks charge their most credit-worthy customers
the four phases of the business cycle
trough, peak, recession, and recovery
recession
two or more consecutive three-month periods of decline in a country’s gross domestic product
depression
a sever recession that last longer than a typical recession and has a large decline in business activity when compared to a recession
Monetary policies
federal reserves (nations bank) decisions that determine the size of the supply of money in the nation and the level of interest rates.
fiscal policy
government influence on the amount of savings and expenditures; accomplished by altering the tax structure and by changing the levels of government spending (taxation and funding)
federal deficit
a shortfall created when the federal government spends more in a fiscal year that it receives (does not meet the budget)
National debt
the total of all federal deficits
What are the four types of competition
perfect (lot of suppliers that supply the same products)
Monopolistic (many competitors that supply different products such as shirts)
oligopoly (very few competitors but high investment such as cars and oil)
monopoly (only one company and is usually illegal)
supply
the quantity of a product that producers are willing to sell at each of various prices
demand
the quantity of a product the buyers are willing to purchase at each of various prices
market price
the price at which the quantity demanded is exactly equal to the quantity supplied
what is a barter
a system of exchange in which goods or services are treated directly for other goods or services without using money.
domestic system
a method of manufacturing in which an entrepreneur distributed raw materials to various homes where families would process them into finished goods to be offered for sale by the merchant
factory system
all the materials, machinery, and workers required to manufacture a product are assembled in one place
specilization
the separation of a manufacturing process into distinct tasks and the assignment of the different tasks to different individuals.
what is ethics
the study of right and wrong of the morality of the choices individuals make
business ethics
the application or moral standards to business situations
fairness and honesty
businesspeople are expected to refrain from knowingly deceiving, misrepresenting, or intimidating others
organizational relationships
a businessperson should put the welfare of others and that of the organization above his or her own personal welfare.
conflict of interest
issues arise when a businessperson takes advantage of a situation for personal gain rather that the employers interest
communications
business communications that are false, misleading, or deceptive are both illegal and unethical
Factors that affect ethic behavior
individual factors (personal knowledge, values, and goals)
social factors (Cultural norms, coworkers, significant others, internet)
Opportunity (Ethical code, enforcing)
Encourage ethical behavior
Government (sarbanes-oxley act of 2002)
trade associates
Individual companies role (code of ethics)
What is social responsibility
Social responsibility is the recognition that business activities have an impact on society and the consideration of that impact in business decision making.
what are the two views on social responsibility
the economic model and the socioeconomic model
what is the economic model of social responsibility
holds that society will benefit most when business is left alone to produce and market profitable products that society needs.
what is the socioeconomic model of social responsibility
holds that business should emphasize not only profits but also the impact of its decisions on society.
President John F. Kennedy declared that the consumer was entitled to a new “bill of rights.”
consumers right to safety
the right to be informed
the right to choose
the right to be heard
Additional Consumer Rights. In 1975, President Ford added
consumer bill of rights consumer education
the right to service
Affirmative Action Programs.
plan designed to increase the number of minority employees at all levels within an organization.
equal employment opportunity convention
a government agency with the power to investigate complaints of employment discrimination and sue firms that practice it.
__hard-core unemployed
workers with little education or vocational training and a long history of unemployment.
environmental concerns
pollution,
national environmental policy act
is the federal agency charged with enforcing laws designed to protect the environment.
green marketing
is the process of creating, making, delivering, and promoting products that are environmentally safe.
Implementing a Program of Social Responsibility
commitment of top executive
commitment of planning
appointment of director
social audit
