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Intro to Business > Chapter 2 > Flashcards

Chapter 2 Flashcards

1
Q

what is economics?

A

the study of how society chooses to employ resources to produce goods and services and distribute them among various competing groups and individuals

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2
Q

what is microeconomics?

A

looks at the behaviour of people and organizations in particular markets

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3
Q

what is macroeconomics?

A

looks at the operation of an economy as a whole

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4
Q

what is resource development?

A

the study of how to increase resources and the creation of the conditions that will make better use of those resources

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5
Q

what is capitalism?

A

when all or most of the factors of production and distribution is owned privately

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6
Q

what is communism?

A

an economic system where the government decides what will be produced and who will consume the results of production

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7
Q

what is socialism?

A

some free market and some government allocation

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8
Q

what kind of economic system do most countries have?

A

mixed economy

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9
Q

how does a free market work?

A

many buyers and sellers trading freely determine the prices at which they will exchange goods and services

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10
Q

how are prices determined in a free market?

A

the constant interplay between supply and demand determines the equilibrium price at which a transaction will occur

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11
Q

what is supply?

A

the quantity of products that manufacturers or owners are willing to sell at different prices at a specific time

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12
Q

what is demand?

A

the quantity of products that people are willing to buy at different prices at a specific time

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13
Q

what is the equilibrium point?

A

the point where quantity demanded and quantity supplied meet

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14
Q

what determines the market price?

A

the equilibrium point

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15
Q

name the four types of competition/ market structure?

A

perfect competition
monopolistic competition
oligopoly
monopoly

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16
Q

what is perfect competition?

A

when there are many sellers in a market and no seller is large enough dictate the price of the product and the product is identical

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17
Q

what is an oligopoly?

A

when a few sellers dominate a market and there is significant investment needed to enter the market

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18
Q

what is a monopoly?

A

when there is only one seller for a good or service and that one seller controls the total supply and price of the product

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19
Q

what is a monopolistic competition?

A

when a large number of sellers produce goods that are similar but buyers perceive them as different

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20
Q

what are 3 benefit of free markets?

A

creation of wealth
allows open competition
brought prosperity

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21
Q

what are 4 limitations to the free market?

A

inequality
poverty
unemployment
greed has dictated how some do business

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22
Q

what is socialism?

A

an economic system based on the premise that some if not most basic businesses should be owned by the government

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23
Q

what are 4 benefits of socialism?

A

focus on social equality
workers get longer vacation
workers work less hours
workers enjoy better benifits

24
Q

what are 4 limitations of socialism?

A

does not motivate business people to work hard

does not motivate business people to invest and create more wealth
less innovation
lack of individual incentive

25
Q

what is communism?

A

it is a political and economic system in which the government makes almost all the economic decisions and owns almost all the major factors of production

26
Q

what are 5 limitations of communism?

A

government has no data on supply and demand which lead to shortages or surplus in production

no motivation for business people to work hard

lack of incentives
will fall on economic hard ship

lack of goods and services that are readily available in other countries

27
Q

what is a free market?

A

exists when the market largely determines what goods and services are produced

28
Q

what is a communist economy?

A

exists when the government largely decides what goods and services are produced, who gets them and how the economy grows

29
Q

what is a mixed Economy?

A

exists where some allocation of resources are made by the government and some by the market

30
Q

name the seven key economic indicators of the Canadian economy?

A

GDP (gross domestic economy)
unemployment rate
housing market
commodity prices
stock market and if people are buying stocks
price indexes
decrease in productivity

31
Q

what is gross domestic product (GDP)?

A

the total goods and services produced in a country by the economy in a given year

32
Q

what is the major influence on the growth of the GDP?

A

the productivity of the workforce

33
Q

when a country produces more how will that effect the GDP?

A

it will raise the GDP

34
Q

when a country produces less how will that effect the GDP?

A

it will lower the GDP

35
Q

what will a strong economy and high GDP lead to?

A

higher standard of living

36
Q

what does standard of living relate to the economy?

A

the amount of goods and services people can buy with the money they have

37
Q

what does quality of life relate to the economy

A

the general well-being of a society in terms of political freedom, a clean natural environment, education, health care, safety and everything else that leads to satisfaction and joy

38
Q

how is productivity measured in the economy?

A

by dividing the total output of goods and services of a given period by the total hours of labour required to produce them?

39
Q

higher productivity will lead to lower what?

A

lower costs for producers to produce those goods and lower costs for consumers to purchase them

40
Q

what qualifications do you need to be part of the unemployment rate?

A

fifteen years and older and actively seeking work but in able to find it

41
Q

what are the four types of unemployment?

A

frictional unemployment
structural unemployment
cyclical unemployment
seasonal unemployment

42
Q

what is frictional unemployment?

A

frictional unemployment refers to people who have quit work due to not liking the job, the boss, or the working conditions and who haven’t found a job yet

43
Q

what is structural unemployment?

A

structural unemployment refers to unemployment due to restructuring of a firm or a mismatch between the skills of job seekers and the requirements of available jobs

44
Q

what is cyclical unemployment?

A

cyclical unemployment occurs because of a recession or a similar downturn in the business cycle

45
Q

what is seasonal unemployment?

A

seasonal unemployment occurs where demand for labour varies over the year

46
Q

what is the consumer price index (CPI)?

A

the CPI index is what economists use to measure the pace of inflation or deflation by determining how much a basket of good and services cost for an average family

47
Q

what makes up a basket of goods?

A

food
transport
clothing
shelter

48
Q

what is inflation?

A

the general rise of the prices of goods and services overtime

49
Q

what is disinflation?

A

the condition where the price of goods and service increases are slowing (the inflation rate is declining)

50
Q

what is deflation?

A

the prices of goods and services are actually declining. this occurs when a country produces so many goods that people cannot afford to by them all (to few dollars chasing to many go prods)

51
Q

what is stagflation?

A

occurs when the economy is slowing but prices are increasing regardless

52
Q

what are business cycles?

A

also known as economic cycles are the periodic rises and falls that occur in economies over time

53
Q

what is an economic boom?

A

occurs when the economy is doing well

54
Q

what is a recession?

A

a recession is when two or more consecutive quarters of decline in the GDP (prices fall, people purchase fewer products, businesses fail, high unemployment rate, drop in living standard)

55
Q

what is a depression?

A

a severe recession usually accompanied by deflation

56
Q

what is an economic recovery?

A

occurs when the economy stabilizes and starts to grow

Intro to Business (25 decks)

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