test 1 Flashcards
individuals or organizations who try to earn a profit by providing products that satisfy people’s needs.
business
Earning profit requires
management skills
marketing expertise
financial resource
social responsibility and acting ethically
stakeholders
include customers, employees, investors, government regulators, and community (they are impacted). by a company’s decisions)
shareholder
they own a part of the company
socialism
government owns basic industries, but individuals own most businesses (taxes and unemployment are generally higher) > ex. postal services, telephone, utilities, transportation, health care
economics
resources distributed for production of goods and services
communism
people own all nation’s resources
suffer from: low of living, high prices, little freedom, corruption (karl marx)
capitalism/free enterprise
individuals own/operate majority of businesses
profits (socialism)
Profits earned by small businesses may be reinvested in the business; profits from government-owned industries go to the government.
profits (communism)
Excess income goes to the government. The government supports social and economic institutions
profits (capitalism)
Individuals and businesses are free to keep profits after paying taxes.
GDP
Gross domestic product; the sum of all goods and services produced in a country during a year
economic expansion
occurs when the economy is growing and people are spending more money (may lead to inflation, reduces buying power)
economic contraction
slow down of economy, may lead to recession
inflation
Inflation is characterized by a continuing rise in prices
recession
categorized as rising levels of unemployment (severe recession may turn into depression
deflation
occurs when rising unemployment stifles demand, forcing prices down.
business ethics
standards set by society; determine acceptable conduct in business organizations
conflict of interest
Exists when person must choose whether to advance personal interests or those of others.
whistle blowing
Employee exposes employer’s wrongdoing to outsiders
argument for social responsibility
1) business helped create problems and should help to solve them;
(2) business has the financial and technical resources to help solve problems;
(3) as a member of society, business should do its fair share to help others;
(4) social responsibility can help prevent increased government regulation; and
(5) social responsibility helps to ensure economic survival
argument against social responsibility
(1) social responsibility detracts from the profit-making objectives of business;
(2) participation in social responsibility programs gives business power at the expense of other segments of society; (3) business may not have the expertise to solve social problems; and
(4) social problems are the responsibility of government agencies
Sarbanes-Oxley Act
help protect shareholders, employees and the public from accounting errors and fraudulent financial practices.
WTO
world trade organization; an international organization dealing with the rules of trade between nations
absolute advantage
the only or most efficient producer of an item (monopoly)
comparative advantage specializes
specializes in products that it can supply more efficiently; however, it is not the sole producer of those products.
balance of trade
difference between exports and important
Balance of payments
Difference between flow of money in and out
import tariff
Fixed tariff is specific amount of money levied on each unit of product brought into country.
quota
Established voluntarily or by government. (restriction on the number of units of a particular product that can be imported into a country)
embargo
Established due to political, economic, health, or religious reasons. (a prohibition on trade in a particular product)
dumping
the act of a country or business selling products at less than what it costs to produce them.
outsourcing
Transferring of manufacturing or other tasks (to where costs are lower)
