Economics Flashcards
economic resources
-inputs used to produce goods and services
-land, labor, capital, and entrepreneurship
economics
study of how people, businesses, and governments make decisions about the allocation of resources
economic activities
-activities that people, businesses, and governments engage in to produce and distribute goods and services
-production, consumption, exchange, distribution, and investment
-driven by desire to make profit or satisfy a need
role of business in society
-providing goods and services that people need and want
-create jobs
-tax revenue for gov
-create sense of community
-promote social responsibility and sustainability
types of business models
-structure used to generate money
-subscription based
-advertising based: providing free services or products in exchange for displaying ads
-marketplace: connecting buyers and sellers for commission
-product based: selling directly to consumers
types of business activities
-activities that a business engages in to generate revenue and profits
-producing goods or services, marketing, sales, customer service, accounting, and other administrative tasks
-2 categories: operational and strategic activities
organizational design of businesses
-creating a structure and culture within a business that will enable it to achieve its goals and objectives
-creation of roles, responsibilities, and processes
global environment in which businesses operate
-complex and ever-changing landscape
-economic, political, social, technological, and environmental elements
factors that affect the business environment
economic, political, social, technological, legal, and environmental factors
business ethics
-businesses should act in a way that is fair, honest, and responsible
-corporate social responsibility, workplace safety, environmental protection, and customer privacy
-integrity, respect, and trustworthiness
organizations adapt to today’s markets
-clear understanding of their target market, customer needs, and the competitive landscape
-implement strategies to capitalize on opportunities and mitigate risks
-resources and infrastructure to support their strategies
-must analyze to improve
impact of small business/entrepreneurship on market economies
-create jobs, stimulate economic growth, and provide goods and services that are not available from larger businesses
-gives competition, results in lower prices, better quality
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private enterprise
type of business organization that is owned and operated by private individuals or groups, rather than by the government
factors affecting business risk
-external factors such as economic conditions, competition, and changes in the market
-internal factors such as the company’s financial position, management capabilities, and operational processes
relationship between government and business
-gov creates laws that businesses follow
-businesses provides goods, services, jobs
-gov gives incentives to businesses, in return get taxes
taxes
-required payment to gov
-based on income, sales, and property
-give the gov with the funds to provide essential services to its citizens
productivity
how efficiently resources are used to produce goods and services
organized labor and business
-relationship between labor unions and employers
-labor unions: organizations of workers that negotiate with employers to ensure fair wages, working conditions, and other benefits
-businesses: organizations that provide goods and services to consumers
impact of the law of diminishing returns
-states as more of a resource is used to produce a product, the marginal output of that product will eventually decrease
-benefit of adding more of a resource will eventually decrease, and the cost of adding more of the resource will eventually outweigh the benefit
economic impact of inflation on business
-when cost of goods and services rises, businesses must increase their prices to keep up
-lead to decreased demand
-reduce their profits and make it difficult for them to remain competitive
-can also lead to higher interest rates, which can make it more expensive to borrow money
Gross Domestic Product (GDP)
-measure of the total economic output of a country
-add the value of all goods and services produced within a country in a given period of time
-measure economic health, size, performance compared to other countries
economic impact of interest-rate fluctuations
-when interest rates rise, leads to increase in borrowing costs, making it more expensive to finance things
-leads to decreased economic activity
-vice versa
global trade
buying and selling of goods and services across international borders
-lets countries specialize
-increases competition, lowers price, better quality
impact of globalization on business
-opened up new markets, increased competition, and allowed businesses to access resources from around the world
-lower production costs and access to cheaper labor
-diversify their products and services
determinants of exchange rates and their effects on the domestic economy
exchange rates: rate at which one currency can be exchanged for another
-economic factors such as inflation, interest rates, government policies, and trade balances
-political factors such as geopolitical tensions and international relations
-strong exchange rate can lead to increased exports, cuz foreign buyers are able to purchase more
-vice versa
-also affects cost of imports as a strong rate makes more expensive and weak rate makes cheaper
impact of major trade alliances on business activities
-agreements between two or more countries to reduce or eliminate trade barriers
-make it easier for businesses to access new markets and increase their sales
-help reduce costs and increase efficiency
impact of the political environment on world trade
-govs can create policies that either encourage or discourage international trade
-can also create trade agreements that reduce or eliminate tariffs and other trade barriers
-can create regulations that affect the flow of goods and services across borders
impact of geography on world trade
-affects the cost of transportation
-availability of resources
-ability of countries to access markets
-ability of countries to form trade agreements
impact of a country’s history on world trade
-conflicts can disrupt trade routes
-political and economic policies
-cultural values and beliefs
-relationships with other countries
impact of a country’s economic development on world trade
-more developed, can produce more goods and services
-increases demand, leads to more trade
-attracts foreign investment
-creates competition
impact of bribery and foreign monetary payments on business
-gives unfair advantage over competition
-lack of transparency and accountability
-decrease in competition
-decrease in public trust
requirements for international business travel
-valid passport is required for all international travel, -visa depending on country
proof of citizenship like birth certificate or naturalization certificate
-immunizations may be required
-sponsorship letters may be required from the company or organization sponsoring the business travel
