Exam 1 Flashcards
Business
Any activity that seeks to provide goods or services to others for profit.
Entrepreneur
The person risking time and money to start and manage a business.
What often leads to success in a new business?
Filling a market need
Revenue
Total amount of money a business takes in during a given period by selling goods and services.
Expense
What you lose
Formula for Profit
R - E = Profit (or loss)
Risk
Chance to lose money/time on a business
Non-Profit Organization
An organization whose goals do not include making a personal profit for its owners or organizers.
Goods
Tangible objects such as computers, food, clothing, and cars.
Services
Intangible objects such as education, healthcare, recreation, and travel.
Standard of Living
The amount of goods and services people can buy with the money they have.
Profit
Total amount of money a business earns above and beyond what it spends for salaries and other expenses.
Loss
When a business expenses are more than its profit.
Quality of Life
The general well-being of a society in terms of its political freedom, natural environment, education, health care, safety, amount of leisure, and rewards that add to the satisfaction and joy that other goods and services provide.
Stakeholder
All the people who stand to gain or lose by the policies and activities of a business and whose concerns the business needs to address.
Outsourcing
Contracting with other companies (often in other countries) to do some or all of the functions of a firm, like its production or accounting tasks.
Insourcing
Insourcing is the assignment of a project to a person or department within a company rather than to a third party.
Importing
Buying products from another country.
Exporting
Selling products to another country.
Efficiency
Producing goods and services with the least amount of resources.
E-Commerce
The buying and selling of goods online.
Productivity
The amount of output you generate given the amount of input (e.g., hours worked).
Demography
The statistical study of the human population with regard to its size, density, and other characteristics such as age, race, gender, and income.
Diversity
Diversity efforts now include older adults, people with disabilities, people with different sexual orientations, atheists, religious, extroverts, introverts, married people, and singles. It also means dealing sensitively with workers and cultures around the world.
Climate Change
The movement of the temperature of the planet up or down over time.
Greening
The trend toward saving energy and producing products that cause less harm to the environment.
Economics
How society employs resources to produce goods and services.
Macroeconomics
The part of economics study that looks at the operation of a nation’s economy as a whole.
Microeconomics
The part of economics study that looks at the behavior of people and organizations in particular markets.
Resource Development
The study of how to increase resources and to create the conditions that will make better use of those resources.
Adam Smith
Believed freedom was vital to economy survival and people will work hard if they will be rewarded.
Invisible Hand Theory
A phrase coined by Adam Smith to describe the process that turns self directed gain into social and economic benefits for all.
Capitalism
An economic system in which all or most of the factors of production and distribution are privately owned and operated for profit.
Pros and Cons of Capitalism
- The right to own private property.
- The right to own a business and keep all that business’s profits.
- The right to freedom of competition.
- The right to freedom of choice.
Supply
The quantity of products that manufacturers or owners are willing to sell at different prices at a specific time.
Demand
The quantity of products that people are willing to buy at different prices at a specific time.
Market Price (Equilibrium)
The price determined by supply and demand.
Perfect Competition
The degree of competition in which there are many sellers in a market and none is large enough to dictate the price of a product.
Oligopoly
A degree of competition in which just a few sellers dominate the market.
Monopolistic Competition
The degree of competition in which a large number of sellers produce very similar products that buyers nevertheless perceive as different.
Monopoly
A monopoly occurs when one seller controls the total supply of a product or service, and sets the price.
Socialism
An economic system based on the premise that some, if not most, basic businesses should be owned by the government so that profits can be more evenly distributed among the people.
Pros and Cons of Socialism
Pros: Social Equality, Free Education, Free Healthcare, Free Childcare, Longer Vacations, More Sick Leave.
Cons: No incentive for risk, no incentive for top performers.
Communism
An economic system based on the premise that some, if not most, basic businesses should be owned by the government so that profits can be more evenly distributed among the people.
Pros and Cons of Communism
Cons: Prices don’t reflect supply and demand as they do in free markets, no incentive to work hard,
Unemployment of rate
The number of civilians at least 16 years old who are unemployed and tried to find a job within the prior four weeks.
Inflation
A general rise in the prices of goods and services over time.
Deflation
A situation in which prices are declining.
Consumer Price Index (CPI)
Monthly statistics that measure the pace of inflation or deflation.
National Debt
The sum of government deficits over time.
National Deficit
Amount of money government spends beyond what it gathers in taxes.
National Surplus
Takes more than it spends.
Business Cycles
The periodic rises and falls that occur in economies over time. Economic Boom Recession Depression Recovery Period
Free Trade
The movement of goods and services among nations without political or economic barriers.
Comparative Advantage Theory
A country should sell to other countries those products it produces most effectively and efficiently, and buy from other countries those products it cannot produce as effectively or efficiently.
Balance of Trade
The total value of a nation’s exports compared to its imports over a particular period.
Licensing
A global strategy in which a firm allows a foreign company (the licensee) to produce its product in exchange for a fee (a royalty).
Franchising
Sells others the right to use the franchise name and sell product.
Contract Manufacturing
A foreign company’s production of private-label goods to which a domestic company then attaches its brand name or trademark; part of the broad category of outsourcing.
Multinational Corporation
An organization that manufactures and markets products in many different countries and has multinational stock ownership and multinational management. sovereign wealth
What types of trade protectionism exists?
Tariff-tax of imported goods
Import Quota-limit on number of products that a nation can import
Embargo-complete ban on the import or export of a certain product
Trade Protection
The use of government relations to limit import of goods and services.
Protective Tariff
Raise retail price of imports
Revenue Tariff
Raise money for the government
Ethics
Standards of moral behavior
Ethical Dilemma
State of moral uncertainty between two or more options
Corporate Social Responsibility
General concern business has for welfare of society.
What questions can determine if something is ethical or not?
Is my action legal?
Is it balanced?
How will it make me feel about myself?
