Midterm Flashcards
What is business?
Any activity that seeks to provide goods and/or services to others while operating at a profit.
Define profit.
The amount of money a business earns above and beyond what it spends for salaries and other expenses.
Who is an entrepreneur?
A person who risks time and money to start and manage a company.
What is revenue?
The total amount of money a business takes in during a given period by selling goods and services.
What does loss mean in a business context?
When a business’s expenses are more than its revenues.
Define standard of living.
The amount of goods and services people can buy with the money they have.
What is quality of life?
The general wellbeing of a society in terms of political freedom, natural environment, education, health care, safety, amount of leisure, and rewards that add to satisfaction.
List the 5 factors of production.
- Land
- Labor
- Capital
- Knowledge
- Entrepreneurship
What is economics?
The study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various groups and individuals.
What does microeconomics focus on?
The behavior of people and organizations in markets for particular products or services.
What is macroeconomics?
The operation of a nation’s economy as a whole, including GDP and CPI.
What is the GDP
Gross domestic product is the total value of final goods and services produced in a country in a given year.
What is CPI?
Monthly statistics that measure the pace of inflation or deflation
Who is Adam Smith?
Considered the ‘father of modern economics.’
What did Adam Smith believe?
Believed creating more resources (and not dividing a fixed amount of resources amongst all) so that more wealth could occur.
What is the ‘invisible hand’?
A phrase coined by Adam Smith to describe self-directed gain turning into social and economic benefits.
What are the 4 basic rights of capitalism?
- Right to own private property
- Right to own a business and keep profits
- Right to competition
- Right to choose
Define supply.
The quantity of products that manufacturers or owners are willing to sell at different prices at a specific time.
What is demand?
The quantity of products that people are willing to buy at different prices at a specific time.
List the 4 degrees of competition.
- Perfect competition
- Monopolistic competition
- Oligopoly
- Monopoly
What is an Oligopoly?
A degree of competition in which just a few sellers dominate the market.
What are examples of an oligopoly?
Tabacco, gasoline, automobiles, aluminum, aircraft
Initial investment required to enter said businesses is often high.
What is 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 the product.
What is Monopolistic Competition?
The degree of competition in which a large number of sellers produce very similar products that buyers nevertheless perceive as different.
Product differentiation is the key to success.
What is a monopoly?
A degree of competition in which only one seller controls the total supply of a product or service, and sets the price.
What is socialism?
An economic system where some basic businesses such as utilities, coal mines, steel mills are owned by the government so profit can be more evenly distributed.
Define communism.
An economic and political system where the government makes almost all economic decisions and owns major factors of production.
What are mixed economies?
Economic systems where some resources are allocated by the market and some by the government.
What is exporting?
Selling products/services to another country.
Define importing.
Buying products/services from another country.
What is free trade?
The exchange of goods and services between countries without economic or political peril.
What does the Comparative Advantage Theory state?
A country should sell goods and services it produces most effectively and buy from others what it cannot produce efficiently.
Define absolute advantage.
Exists when a country monopolizes producing a specific product or produces it more efficiently than all other countries.
What is the balance of trade?
The total value of a nation’s exports compared to its imports over a period.
Define balance of payments.
The difference between money coming into a country from exports and money leaving for imports, plus other factors.
What is a sole proprietorship?
A business owned and usually managed by one person.
Define partnership.
A legal form of business with 2 or more owners.
What is a corporation?
A legal entity with authority to act and have liability separate from its owners.
What is a Limited Liability Company?
A company similar to an S corporation but without special eligibility requirements.
Define franchises.
Businesses created by one entity that purchase rights to use a specific business name and sell its product.
Why do people take the entrepreneurial challenge?
- Opportunity
- Profit
- Independence
- To be challenged
What are micropreneurs?
Entrepreneurs who accept the risk of starting a business but focus on a balanced lifestyle.
Define intrapreneurs.
Creative people who work as entrepreneurs within a larger organization.
What is a business plan?
A detailed written statement describing the nature of the business, target market, advantages, and resources.
What is the Small Business Administration?
A U.S. government agency that assists small businesses with management training, financial advice, and loans.
List the 4 functions of management.
- Planning
- Organizing
- Leading
- Controlling
What is a vision in a business context?
An encompassing explanation of why the organization exists and where it’s headed.
Define mission statement.
An outline of the fundamental purposes of an organization.
What is a SWOT analysis?
A planning tool to analyze an organization’s strengths, weaknesses, opportunities, and threats.
List the levels of management.
- Top management
- Middle management
- Supervisory management
What is autocratic leadership?
Making managerial decisions without consulting others.
Define participative (democratic) leadership.
Managers and employees work together to make decisions.
What is free-reign leadership?
Managers set objectives and employees are free to accomplish them as they see fit.
What does empowering workers mean?
Giving employees the authority to make decisions on their own.
Define intrinsic reward.
The personal satisfaction a worker gets from performing well.
What is extrinsic reward?
Recognition given by someone else for a job well done.
Who is Fredrick Taylor?
Considered the ‘father’ of scientific principles of management. His goal was to increase worker productivity to benefit both the company and the worker.
What is the Hawthorne Effect?
The tendency for people to behave differently when they know they are being studied.
What is Maslow’s Hierarchy of Needs?
A theory that outlines human motivation based on needs from physiological to self-actualization.
What the 5 levels of Maslow’s hierarchy of needs?
Physiological, Safety, Social, Esteem, Self-Actualization
What is job enrichment?
A motivational strategy that emphasizes motivating the worker through the job itself. Based on Herzberg’s higher motivators, such as responsibility, achievement and recognition.
What do Theory X managers believe?
Motivation is more likely to come from punishment than reward.
Define Theory Y.
Managers emphasize a relaxed atmosphere where workers are free to set objectives and be creative.
What is Human Resource Management
The process of determining human resource needs and then recruiting, selecting, developing, motivating, evaluating, compensating, and scheduling employees to achieve organizational goals.
What is Performance Appraisal
An evaluation that measures employee performance against established standards in order to make decision about promotions, compensation, training, or termination.
Name the advantages of partnerships
More financial resources, shared management; complementary skills & knowledge, longer survival, no special taxes.
all profits of partnerships are taxed as personal income.
Name the disadvantages of partnerships
Unlimited liability, division of profits, disagreements among partners, difficulty of termination.
What is an S-Corporation?
A unique government business that look like a corporation but is taxed like sole propietorships and partnerships. Must meet specific criteria to qualify.
