Lecture 2-130905

Question 1

What are the decisions to consider for a start up?

Answer 1

1. What is the product or service offered
2. What is the competitive environment
3. What are the key inputs necessary

Question 2

What are key inputs?

Answer 2

Physical, financial, and human capital

Question 3

Define human capital?

Answer 3

The stock of knowledge, experience, and education that a person has

Question 4

What are capital goods?

Answer 4

good or products used to help produce other goods or products e.g. machinery, capital

Question 5

What are some of the barriers to acquiring key inputs

Answer 5

legal or regulatory barriers, obtaining financing, is physical or supplies readily available. e.g. Alcoa had complete control of boxsites for aluminum

Question 6

How is a small business defined by the federal government?

Answer 6

500 or less

Question 7

List the five types of financing used by small and medium-sized business in order of importance?

Answer 7

1. Owner funds (home equity, savings, pension, credit card max, retirement savings)
2. Family & friends
3. Partners (decision-making more difficult, profits spread out)
4. Federal government (SBA)
5. Depository institution

Question 8

List issues in acquiring key inputs?

Answer 8

human capital not available; physical goods aren’t readily available, financing is not available. Legal and regulatory obstacles-patents

Question 9

What is capital budgeting?

Answer 9

The decisions that are taking in selecting the financing for the necessary capital of a business.

Question 10

What are the differences in financing sources between large and small/medium sized firms.

Answer 10

Large firms are able to issue commercial issue and stock.

Question 11

Define differentiation

Answer 11

A situation in which consumers perceive a product or service as separate or unique from other products or services.

Question 12

What things are considered for the quantity demand function

Answer 12

what are the predictor/independent variables? ie price of substitutes, price of products

Question 13

What are the the other variables that can affect the quantity demanded?

Answer 13

shift variables

Question 14

What is the relationship of quantity demanded and price, complements, income, credit, advertising

Answer 14

Price=Inverse; complements=inverse; income=direct (there are exceptions to this i.e. potatoes.); Credit (availability or cost)=inverse; advertising=positive

Question 15

What is a durable good?

Answer 15

a product that provides good or benefit for three or more years.

Question 16

What are two important details to remember when drawing a demand or supply curve?

Answer 16

one the Y-axis for price it is per unit (can be a six pack) and for X-axis it is for a specified period of time (month, year, week, etc.)

Question 17

What is a substitute, complements

Answer 17

a product or service that is similar and can be used as an alternate or is used together