Chapters 1-4

Question 1

value

Answer 1

the relationship between the price of a good or a service and the benefits that it offers its customers

Question 2

business

Answer 2

any activity that provides goods and services in an effort to earn a profit

Question 3

profit

Answer 3

the money that a business earns in sales (or revenue) minus expenses, such as the cost of goods and the cost of salaries

Question 4

loss

Answer 4

when a business incurs expenses that are greater than its revenue

Question 5

entrepreneurs

Answer 5

people who risk their time, money, and other resources to start and manage businesses

Question 6

standard of living

Answer 6

the quality and quantity of goods and services available to a population

Question 7

quality of life

Answer 7

the overall sense of well-being experienced by either an individual or a group

Question 8

not-for-profit organization

Answer 8

business-like establishments that employ people and produce goods and services with the fundamental goal of contributing to the community rather than generating financial gain

Question 9

factors of production

Answer 9

four fundamental elements - natural resources, capital, human resources, and entrepreneurship - that businesses need to achieve their objectives. Some combination of these factors is crucial for an economic system to create wealth

Question 10

business environment

Answer 10

the setting in which business operates. The five key components are economic environment, competitive environment, technological environment, social environment, and global environment

Question 11

speed-to-market

Answer 11

the rate at which a new product moves from conception to commercialization

Question 12

business technology

Answer 12

any tools - especially computers, telecommunications, and other digital products - that businesses can use to become more efficient and effective

Question 13

World Wide Web

Answer 13

the service that allows computer users to easily access and share information on the Internet in the form of text, graphics, video, and animation

Question 14

e-commerce

Answer 14

business transactions conducted online, typically via the Internet

Question 15

demographics

Answer 15

the measurable characteristics of a population; factors include: population size, density, age, gender, and race

Question 16

free trade

Answer 16

an international economic and political movement designed to help goods and services flow more freely across international boundaries

Question 17

General Agreement on Tariffs and Trade (GATT)

Answer 17

an international trade agreement that has taken bold steps to lower tariffs and promote free trade worldwide

Question 18

communication

Answer 18

the transmission of information between a sender and a recipient

Question 19

encoding

Answer 19

the act of putting a message in terms that are understandable to others

Question 20

communication channels

Answer 20

the various ways in which a message can be sent, ranging from one-on-one in-person messages to Internet message boards

Question 21

decoding

Answer 21

the receiver putting a message in terms that she or he can understand

Question 22

feedback

Answer 22

how the receiver responds to a message

Question 23

noise

Answer 23

any interference that causes the message you send to be different from the message your audience understands

Question 24

communication barriers

Answer 24

obstacles to effective communication, typically defined in terms of physical, language, body language, personal experience, cultural, perceptual, and organizational barriers

Question 25

intercultural communication

Answer 25

communication among people with differing cultural backgrounds

Question 26

nonverbal communication

Answer 26

communication that does not use words. Common forms of nonverbal communication include gestures, posture, facial expressions, tone of voice, and eye contact

Question 27

active listening

Answer 27

attentive listening that occurs when the listener focuses his or her complete attention on the speaker

Question 28

bias

Answer 28

a preconception about members of a particular group. Common forms of bias include gender bias; age bias; and race, ethnicity, or nationality bias

Question 29

active voice

Answer 29

sentence construction in which the subject performs the action expressed by the verb (e.g., My sister wrote the paper)

Question 30

passive voice

Answer 30

sentence construction in which the subject does not do the action expressed by the verb; rather, the subject is acted upon (e.g., the paper was written by my sister)

Question 31

dynamic delivery

Answer 31

vibrant, compelling presentation delivery style that grabs and holds the attention of the audience

Question 32

ethics

Answer 32

a set of beliefs about right and wrong, good and bad

Question 33

universal ethical standards

Answer 33

ethical norms that apply to all people across a broad spectrum of situations

Question 34

business ethics

Answer 34

the application of right and wrong, good and bad in a business setting

Question 35

ethical dilemma

Answer 35

a decision that involves a conflict of values; every potential course of action has some significant negative consequences

Question 36

code of ethics

Answer 36

a formal, written document that defines the ethical standards of an organization and gives employees the information they need to make ethical decisions across a range of situations

Question 37

whistleblowers

Answer 37

employees who report their employer’s illegal or unethical behaviour to either the authorities or the media

Question 38

social responsibility

Answer 38

the obligation of a business to contribute to society

Question 39

stakeholders

Answer 39

any groups that have a stake - or personal interest - in the performance and actions of an organization

Question 40

consumerism

Answer 40

a social movement that focuses on four key consumer rights: (1) the right to be safe, (2) the right to be informed, (3) the right to choose, and (4) the right to be heard

Question 41

planned obsolence

Answer 41

the strategy of deliberately designing products to fail in order to shorten the time between purchases

Question 42

Sarbanes-Oxley Act

Answer 42

U.S. federal legislation passed in 2002 that sets higher ethical standards for public corporations and accounting firms. Key provisions limit conflict-of-interest issues and require financial officers and CEOs to certify the validity of their financial statements

Question 43

corporate philanthropy

Answer 43

all business donations to not-for-profit groups, including money, products, and employee time

Question 44

cause-related marketing

Answer 44

marketing partnerships between businesses and not-for-profit organizations, designed to spike sales for the company and raise money for the not-for-profit organization

Question 45

corporate responsibility

Answer 45

business contributions to the community through the actions of the business itself rather than donations of money and time

Question 46

sustainable development

Answer 46

doing business to meet the needs of the current generation, without harming the ability of future generations to meet their needs

Question 47

carbon footprint

Answer 47

the amount of greenhouse gases that a firm emits throughout its operations, both directly and indirectly

Question 48

green marketing

Answer 48

developing and promoting environmentally sound products and practises to gain a competitive edge

Question 49

social audit

Answer 49

a systematic evaluation of how well a firm is meeting its ethics and social responsibility goals

Question 50

economy

Answer 50

a financial and social system of how resources flow through society, from production, to distribution, to consumption

Question 51

economics

Answer 51

the study of the choices that people, companies, and governments make in allocating society’s resources

Question 52

macroeconomics

Answer 52

the study of a country’s overall economic issues, such as the employment rate, the gross domestic product, and taxation policies

Question 53

microeconomics

Answer 53

the study of smaller economic units such as individual consumers, families, and individual businesses

Question 54

fiscal policy

Answer 54

government efforts to influence the economy through taxation and spending

Question 55

budget surplus

Answer 55

overage that occurs when revenue is higher than expenses over a given period of time

Question 56

budget defecit

Answer 56

shortfall that occurs when expenses are higher than revenue over a given period of time

Question 57

federal debt

Answer 57

the sum of all the money that the federal government has borrowed over the years and not yet repaid

Question 58

monetary policy

Answer 58

Bank of Canada decisions that shape the economy by influencing interest rates and the supply of money

Question 59

M1 money supply

Answer 59

includes all currency plus chequing accounts and traveller’s cheques

Question 60

M2 money supply

Answer 60

includes all of M1 money supply plus most savings accounts, money market accounts, and certificates of deposit

Question 61

open market operations

Answer 61

the Bank of Canada function of buying and selling government securities, which include treasury bonds, notes, and bills

Question 62

bank rate

Answer 62

the rate of interest that the Bank of Canada charges when it loans funds to banks

Question 63

reserve requirement

Answer 63

a rule that specifies the minimum amount of reserves (or funds) a bank must hold, expressed as a percentage of the bank’s deposits

Question 64

Canada Deposit Insurance Corporation (CDIC)

Answer 64

a federal Crown corporation that insures deposits in banks and thrift institutions for up to $100,000 per customer, per bank

Question 65

economic system

Answer 65

a structure for allocating limited resources

Question 66

capitalism

Answer 66

an economic system - also known as the private enterprise or free market system - based on private ownership, economic freedom, and fair competition

Question 67

pure competition

Answer 67

a market structure with many competitors selling virtually identical products. Barriers to entry are quire low

Question 68

monopolistic competition

Answer 68

a market structure with many competitors selling differentiated products. Barriers to entry are low

Question 69

oligopoly

Answer 69

a market structure with only a handful of competitors selling products that are either similar or different. Barriers to entry are typically high

Question 70

monopoly

Answer 70

a market structure with one producer completely dominating the industry, leaving no room for any significant competitors. Barriers to entry tend to be virtually insurmountable

Question 71

natural monopoly

Answer 71

a market structure with one company as the supplier of a product because the nature of that product makes a single supplier more efficient than multiple, competing ones. Most natural monopolies are government sanctioned and regulated

Question 72

supply

Answer 72

the quantity of products that producers are willing to offer for sale at different market prices

Question 73

supply curve

Answer 73

the graphed relationship between price and quantity from a supplier standpoint

Question 74

demand

Answer 74

the quantity of products that consumers are willing to buy at different market prices

Question 75

demand curve

Answer 75

the graphed relationship between price and quantity from a customer demand standpoint

Question 76

equilibrium price

Answer 76

the price associated with the point at which the quantity demanded of a product equals the quantity supplied

Question 77

socialism

Answer 77

an economic system based on the principle that the government should own and operate key enterprises that directly affect public welfare

Question 78

communism

Answer 78

an economic and political system that calls for public ownership of virtually all enterprises, under the direction of a strong central government

Question 79

mixed economies

Answer 79

economies that embody elements of both planned and market-based economic systems

Question 80

privatization

Answer 80

the process of converting government-owned businesses to private owned

Question 81

gross domestic product (GDP)

Answer 81

the total value of all final goods and services produced within a nation’s physical boundaries over a given period of time

Question 82

unemployment rate

Answer 82

the percentage of people in the labour force of employment age who do not have jobs and are actively seeking employment

Question 83

business cycle

Answer 83

the periodic contraction and expansion that occur over time in virtually every economy

Question 84

contradiction

Answer 84

a period of economic downturn, marked by rising unemployment and failing business production

Question 85

recession

Answer 85

an economic downturn marked by a decrease in the GDP for two consecutive quarters

Question 86

depression

Answer 86

an especially deep and long-lasting recession

Question 87

recovery

Answer 87

a period of rising economic growth and employment

Question 88

expansion

Answer 88

a period of robust economic growth and high employment

Question 89

inflation

Answer 89

a period of rising average prices across the economy

Question 90

hyperinflation

Answer 90

an average monthly inflation rate of more than 50 percent

Question 91

disinflation

Answer 91

a period of slowing average price increases across the economy

Question 92

deflation

Answer 92

a period of falling average prices across the economy

Question 93

consumer price index (CPI)

Answer 93

a measure of inflation that evaluates the change in the weighted-average price of goods and services that the average consumer buys each month

Question 94

producer price index (PPI)

Answer 94

a measure of inflation that evaluates the change over time in the weighted-average wholesale prices

Question 95

productivity

Answer 95

the basic relationship between the production of goods and services (output) and the resources needed to produce them (input), calculated via the following equation: Output/Input = Productivity

Question 96

Define business and discuss the role of business in the economy.

Answer 96

A business is any activity that provides goods and services in an effort to earn a profit. Profit is the money that a business earns in sales minus expenses such as the cost of goods and the cost of salaries. Profit potential provides a powerful incentive for people to start their own businesses or to become entrepreneurs. Successful businesses create wealth, which increases the standard of living for virtually all members of society.

Question 97

Explain the evolution of modern business.

Answer 97

Business historians typically divide our business history into five distinct eras, which overlap during the periods of transition.
1 - Industrial Revolution: From the mid-1700s to the mid-1800s, technology fuelled a period of rapid industrialization. Factories sprang up in cities, leading to a mass production and specialization of labour.
2 - Entrepreneurship Era: During the second half of the 1800s, large-scale entrepreneurs emerged, building business empires that created enormous wealth, but often at the expense of workers and consumers.
3 - Production Era: In the early 1900s, major businesses focused on further refining the production process, creating huge efficiencies. The assembly line, introduced in 1913, boosted productivity and lowered costs.
4 - Marketing Era: After World War II, consumers began to gain power. As goods and services flooded the market, the marketing concept emerged: a consumer-first orientation as a guide to business decision making.
5 - Relationship Era: With the technology boom in the 1990s, businesses have begun to look beyond the immediate transaction, aiming to build a competitive edge through long-term customer relationships.

Question 98

Discuss the role of not-for-profit organizations in the economy.

Answer 98

Not-for-profit organizations often work hand in hand with business to improve the quality of life in our society. Not-for-profits are business-like establishments that contribute to economic stability and growth. Similar to businesses, not-for-profits generate revenue and incur expenses. Their goal is to use any revenue above and beyond expenses to advance the goals of the organization rather than to make money for its owners. Some not-for-profits – such as museums, schools, and theatres – can act as economic magnets for communities, attracting additional investment.

Question 99

Outline the core factors of production and how they influence the economy.

Answer 99

The four factors of production are the fundamental resources that both businesses and not-for-profit organizations use to achieve their objectives.
1 - Natural resources: All inputs that offer value in their natural state, such as land, fresh water, wind, and mineral deposits. The value of natural resources tends to rise with high demand, low supply, or both.
2 - Capital: The manmade resources that an organization needs to produce goods or services. The elements of capital include machines, tools, buildings, and technology.
3 - Human resources (Labour): The physical, intellectual, and creative contributions of everyone who works within an economy. Education and motivation have become increasingly important as technology replaces manual labour jobs.
4 - Entrepreneurship: Entrepreneurs take the risk of launching and operating their own businesses. Entrepreneurial enterprises can create a tidal wave of opportunity by harnessing the other factors of production.

Question 100

Describe today’s business environment and discuss each key dimension.

Answer 100

Accelerating change marks every dimension of today’s business environment.
1 - Economic environment: The Canadian economy remains relatively strong because the government actively supports free enterprise and fair competition.
2 - Competitive environment: As global competition intensifies, leading-edge companies have focused on long-term customer satisfaction as never before.
3 - Technological environment: The recent technology boom has transformed business, establishing new industries and burying others.
4 - Social environment: The Canadian population continues to diversify. Consumers are gaining power, and society has higher standards for business behaviour.
5 - Global environment: The Canadian economy works within the context of the global environment. A key factor is rapid economic growth in China and India.

Question 101

Explain how current business trends might impact your career choices.

Answer 101

With automation picking up speed, many traditional career choices have become dead-ends. But some things – including empathy, creativity, change management, and great communication – can’t be digitized. Having these skills can provide you with personal and financial opportunity.

Question 102

Explain the importance of excellent business communication.

Answer 102

Effective communication happens when relevant meaning is transmitted from the sender to the receiver. Skillful communicators save time and money and develop deeper, more trusting relationships with their colleagues. Anything that interferes with the correct transmission of your message is a barrier to communication. To communicate effectively, you should be able to identify and surmount any barriers that stand between you and your audience. The result? Greater long-term success in every aspect of business.

Question 103

Describe the key elements of nonverbal communication.

Answer 103

The key elements of nonverbal communication include eye contact. tone of voice, facial expressions, gestures, and posture. Studies suggest that on average only 7 percent of meaning during face-to-face communication comes from the verbal content of the message, which magnifies the importance of every element of nonverbal communication. Active listening also plays an influential role. The starting point is empathy: a genuine attempt to understand and appreciate the speaker. You should signal your focus to the speaker through verbal cues such as “I understand your point” and nonverbal cues such as nods, eye contact, and leaning forward. The result will be better relationships and better information for you.

Question 104

Compare, contrast, and choose effective communication channels.

Answer 104

Communication channels differ significantly in terms of richness: the amount of information that they offer the audience. The spectrum ranges from written communication at the low end to face-to-face meetings at the high end. The best choice depends on your objective, your message, and your audience. To ensure that your communication achieves your goals, always consider the needs and expectations of your audience. If you tailer each message with the audience in mind, you’ll give yourself a competitive edge in terms of the time, attention, and response of your audience.

Question 105

Choose the right words for effective communication.

Answer 105

The right words can make the difference between a message your audience absorbs and a message your audience ignores. Keep these considerations in mind: analyze your audience, be concise, avoid slang, avoid bias, and use active voice.

Question 106

Write more effective business memos, letters, and e-mails.

Answer 106

Here, too, you should begin with the needs of your audience; their anticipated response should drive the structure of your writing. Determine the “bottom line” of your communication and be sure to deliver it upfront. Your message itself should have a natural tone and be completely free of grammatical errors.

Question 107

Create and deliver successful verbal presentations.

Answer 107

A great presentation begins with a hook that draws in your audience and engages their attention. The body of the presentation typically focuses on three key points, supported by credible information and persuasive arguments. The close summarizes the key points and often refers back to the opening hook. Dynamic delivery is simply a matter of practice, with a focus on knowing your material.

Question 108

Define ethics and explain the concept of universal ethical standards.

Answer 108

Ethics is a set of beliefs about right and wrong, good and bad. Who you are as a human being, your family, and your culture all play a role in shaping your ethical standards. The laws of each country usually set minimum ethical standards, but truly ethical standards typically reach beyond minimum legal requirements. Despite some significant cultural and legal differences, people around the globe tend to agree on core values, which can serve as a starting point for universal ethical standards across a wide range of situations: trustworthiness, respect, responsibility, fairness, caring, and citizenship.

Question 109

Describe business ethics and ethical dilemmas.

Answer 109

Business ethics is the application of right and wrong, good and bad in a business setting. Ethical dilemmas arise when you face business decisions that throw your values into conflict. These are decisions that force you to choose among less than ideal options because whatever choice you make will have some significant negative consequences.

Question 110

Discuss how ethics relates to both the individual and the organization.

Answer 110

Ethical choices begin with ethical individuals. To help people make good choices experts have developed frameworks for reaching ethical decisions. While the specifics vary, the core principles of most decision guides are similar: (1) Do you fully understand each dimension of the problem? (2) Who would benefit? Who would suffer? (3) Are the alternatives legal? Are they fair? (4) Does your decision make you feel comfortable at a “gut feel” level? (5) Could you defend your decision on the nightly TV news? (6) Have you considered and reconsidered your responses to each question? : While each person is responsible for his or her own actions, the organization can also have a dramatic influence on the conduct of individual employees. An ethical culture – which includes ethical leadership from top executives and accountability at every level of the organization – has an outsized impact on individual conduct. But formal ethics programs also play a crucial role. A written code of ethics – a document that lays out the values and priorities of the organization – is the cornerstone of a formal ethics program. Other key elements include ethics training and a clear enforcement policy for ethical violations.

Question 111

Define social responsibility and examine the impact on stakeholder groups.

Answer 111

Social responsibility is the obligation of a business to contribute to society. Enlightened companies carefully consider the priorities of all stakeholder – groups who have an interest in their actions and performance – as they make key decisions. Core stakeholder groups for most businesses are listen below, along with key obligations. (1) Employees: Treat employees with dignity, respect, and fairness. Ensure that hard work and talent pay off. Help workers balance emerging work-life priorities. (2) Customers: Provide quality products at a fair price. Ensure that customers are safe and informed. Support consumer choice and consumer dialogue. (3) Investors: Create an ongoing stream of profits. Manage investor dollars according to the highest legal and ethical standards. Support full disclosure. (4) Community: Support not-for-profit groups that improve the community and fit with your company. Minimize the environment impact of your business.

Question 112

Explain the role of social responsibility in the global arena.

Answer 112

Social responsibility becomes more complex in the global arena due largely to differences in the legal and cultural environments. Bribery and corruption are key issues, along with concern for human rights and environmental standards.

Question 113

Describe how companies evaluate their efforts to be socially responsible.

Answer 113

Many companies – even some entire industries – monitor themselves. The process typically involves establishing objectives for ethics and social responsibility and then measuring achievement of those objectives on a systematic, periodic basis. Other groups play watchdog roles as well. Key players include activist customers, investors, unions, environmentalists, and community groups.

Question 114

Define economics and discuss the global economics crisis.

Answer 114

Economics – the study of how people, companies, and governments allocate resources – offers vital insights regarding the forces that impact every business on a daily basis. Understanding economics helps businesspeople make better decisions, which can lead to greater short-term and long-term profitability. Macroeconomics is the study of broad economic trends. Microeconomics focuses on the choices made by smaller economic units, such as individual consumers, families, and businesses. Globally, there has been an economic slowdown over the last several years, and it is predicted to continue. The most troubled area is the eurozone, but because the global economies are not so interdependent, trouble there means slower growth elsewhere as well. The economics of Canada and the United States will most likely grow, but at slower rates than we are used to, and Canada’s growth is very much dependent on what will happen in the United States.

Question 115

Analyze the impact of fiscal and monetary policy on the economy.

Answer 115

Fiscal policy and monetary policy refer to efforts to shape the health of the economy. Fiscal policy involves government taxation and spending decisions designed to encourage growth and boost employment. Monetary policy refers to decisions by the Bank of Canada that influence the size of the money supply and the level of interest rates. Both fiscal and monetary policies played a pivotal role in mitigating the impact of the recent financial crisis and establishing a framework for recovery. Canada was thereby able to weather the crisis better than many other countries. These tools can also help sustain economic expansions.

Question 116

Explain and evaluate the free market system and supply and demand.

Answer 116

Capitalism, also known as the free market system, is based on private ownership, economic freedom, and fair competition. In a capitalist economy, individuals, businesses, or not-for-profit organizations privately own the vast majority of enterprises. As businesses compete against each other, quality goes up, prices remain reasonable, and choices abound, raiding the overall standard of living. The interplay between the forces of supply and demand determines the selection of products and prices available in a free market economy. Supply refers to the quantity of products that producers are willing to offer for sale at different market prices at a specific time. Demand refers to the quantity of products that consumers are willing to buy at different market prices at a specific time. According to economic theory, markets will naturally move toward the point at which supply and demand are equal: the equilibrium point.

Question 117

Explain and evaluate planned market systems.

Answer 117

In planned economies, the government – rather than individual choice – plays a pivotal role in controlling the economy. The two main types of planned economies are socialism and communism. While planned economies aim to create more equity among their citizens, they tend to be more prone to corruption and less effective at generating wealth than market-based economies.

Question 118

Describe the trend toward mixed market systems.

Answer 118

Most of today’s nations have mixed economies, falling somewhere along a spectrum that ranges from pure planned at one extreme to pure market at the other. Over the past 30 years, most major economies around the world have moved toward the market end of the spectrum, although recently – in the wake of the global financial crisis – Canada has added more planned elements to the economy.

Question 119

Discuss key terms and tools to evaluate economic performance.

Answer 119

Because economic systems are so complex, no one measure captures all the dimensions of economic performance. But each measure yields insight on overall economic health. (1) Gross domestic product (GDP): The total value of all final goods and services produced within a nation’s physical boundaries over a given period of time. (2) Unemployment rate: The percentage of the labour force of employment age who don’t have jobs and who are actively seeking employment. (3) Business cycle: The periodic expansion and contraction that occur over time in virtually every economy. (4) Inflation rate: The rate at which prices are rising across the economy. The government tracks the consumer price index and the producer price index. (5) Productivity: The relationship between the goods and services that an economy produces and the inputs needed to produce them.