Chapter 1 The Economic Foundations Of Business. Flashcards
What’s economics? Explain.
The study af how resourcesare distributed for the production of goods and services within a social system.
What are the four types of resources?
Natural resources,human resources (labor), financial resources (capital) and intangible resources.
What are economic systems?
A description of how a particular society distributes its resources to produce goods and services’.
What are the three main types of economic systems? What’s fourth one?
Communism, socialism and capitalism ( free enterprise). And mixed economies.
Two types of capitalism.
Pure capitalism (free-market system) and modified capitalism.
Business ownership in communism:
Most businesses are owned and operated by the government.
Business ownership in socialism:
The government owns ardoperates some basic industries; individuals own businesses.
Business ownership in capitalism:
Individuals own and operate all business.
Competition in communism:
Government controls competition and the economy.
Competition in socialism:
Restricted in basic industries. I encouraged in other business.
Competition in capitalism:
Encouraged by market forces and government regulations.
Profits in communism:
Excess income goes to the government. The government supports social economic institutions,
Profits in socialism:
Profits earned by businesses may be reinvested in the business; profits from government-owned industries go to the government.
Profits in capitalism:
Individuals and businesses are free to keep profits after paying taxes.
Product availability and price in communism:
Consumers have a limited choice of goods and services; prices are usually high.
Product availability in socialism:
Consumers have some choice of goods and services; prices are determined by supply and demand.
Product availability and price in capitalism:
Consumers have a wide choice of goodsand services; prices are determined by supply and demand.
Employment options in communism:
Little choice in choosing a career; most people work for government - owned industries or farms.
Employment options in socialism:
More choice of careers,
Many people work in government jobs.
Employment options:
Unlimited choice of careers.
Free-enterprise system:
Allows a company to succeed or fail on the basis of market demand.
2 facts abt free-enterprise system:
Many large economies are free - enterprise,suchas US Canada and Japan. Many communist and socialist counties apply free enterprise principles such as China and Russia.
What are some basic individual business rights? For it to work
Right to own property. Right to earn profits and use them as one wishes. Right to determine business operations. Right on to dose a career, where to live or locate a business, what goods/services to purchase, and more.
What’s demand?
The number of products that businesses are willing to sell at different prices at a specific time.
What’s supply?
The number of products that businesses are willing to sell at diferent price at a specific time.
What’s equilibrium price?
The price at which the number of products that businesses are willing to supply equals the amount of products that consumers are willing to buy at a specific point in time.
What’s competition?
The rivalry among businesses for consumer’s dollars.
What are four types of competitive environments?
Pure competition, monopolistic competition oligopoly and monopoly.
What’s pure competition?
What’s monopolistic competition?
What’s oligopoly competition?
What’s monopoly competition?
What happens in economic expansion?
Inflation - a condition characterized by a continuing rise prices in.
What happens in economic contraction?
Recession- a decline in population employment and income. Unemployment- a percentage of the population wants to work but is unable find jobs. Depression - unemployment is very high, consumer spending is low, and business output is sharp reduced.
What’s gross domestic product? (GDP)
The sum of all goods and servicesproduced in a country during a year.
What’s budget deficit?
The condition in which a nation spends more than it takes in from taxes.
What’s trade balance?
The difference between our exports and our imports. If the balance is negative, as it has been since the mid-1980s, it is called a trade deficit and is generally viewed as unhealthy for our economy.
Consumer price index?
Measures changes in prices of goods and services purchased for consumption by typicalurban households.
What’s per capital income?
Indicates the income level of “average” Americans. Useful in determining how much “average” consumers spend and how much money Americans are earning.
What’s unemployment rate?
Indicates how many working-age americans are not working who otherwise want to work.
What’s inflation?
Monitors price increases in consumer goods and services over specified periods of time. Used to determine if costs of goods and services are exceeding worker compensation time.
What’s worker productivity?
The amount of goods and services produced for each hour worked.
Describe the American economy:
Mixed econ omy, foundation based on capitalism, standard living (the level of wealth and material comfort that people have available to them)
What’s open economy?
An economy in which economic activities occur between the country , and the international community.
3 economy assessed on several factors?
Growth in GDP and jobs, government policy, and tax revenue from individuals and businesses.
Early economy:
Based on farming. (Agriculture)
Industrial Revolution:
Manufacturing.
Manufacturing and marketing economies:
Based on service.
Service and economy now:
Digital economy- (Digital)
Technology:
Includes the method and processes creating applications to solve problems, tasks perform and make decisions.
Example of technology in the economy?
Artificial intelligence (AI), big data blockchain and drones.
Entrepreneurs
An individual who risks money ,time and effort to develop for profit an innovative product or way of doing something.
Two facts of entrepreneurs:
Let the free-enterprisesystem help them to succeed. Change business practices through new technology and innovative management techniques.
What’s the role of government in the American economy;
Best described as modified capitalism,regulate business to preserve competition and protect consumers through laws and regulations. Intervene occasionalIy to regulate economy and spur growth
What do you need to be successful in business:
Knowledge, skills experience and good judgment.
Role of ethics and social responsibility in business?
Promote public confidence incorporate America, foster business ethics, encourage socially responsible behavior, aus diversity in montage, enhance reputation and drive profits.
