Business chapter 1 – Flashcards
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the system of business in which individuals are free to decide what to produce, how to produce it, and at what price to sell it
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free enterprise
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differences among people in a workplace owing to race, ethnicity, and gender
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cultural diversity
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the organized effort of individuals to produce and sell, for a profit, the goods and services that satisfy society's needs
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business
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the organized effort of individuals to produce and sell for a profit, the goods and services that satisfy society's needs through the facilities available on the internet
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e-business
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what remains after all business expenses have been deducted from sales revenue rewards to the owners for taking on risks
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profit
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all the different people or groups of people who are affected by an organization's policies, decisions, and activities i. Anybody who has an interest in our business succeeding (investors, shareholders, owners, banks, consumers, employees, government, former employers, family, the entire community, the media
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stakeholders
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the study of how wealth is created and distributed
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economics
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the study of the decisions made by individuals and the businesses
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microeconomics
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the study of the national economy and the global economy
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macroeconomics
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the way in which people deal with the creation and distribution of wealth
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economy
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resources used to produce goods and services
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factors of production
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a person who risks, time, effort, and money to start and operate a business
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entrepreneur
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an economic system in which individuals own and operate the majority of businesses that provide goods and services
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capitalism
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a term created by Adam Smith to describe how an individual's personal gain benefits others and a nation's economy
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invisible hand
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an economic system in which businesses and individuals decide what to produce and buy, and the marked determines quantities sold and prices
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market economy
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an economy that exhibits elements of both capitalism and socialism
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mixed economy
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goods and services purchased by individuals for personal consumption
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consumer products
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gov decides what goods and services will be produced, how they will be produced, for whom available goods and services will the produced, and who own and controls the major factors of production
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command economy
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the average level of output per worker per hour
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productivity
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total dollar value of all goods and services produced by all people within the boundaries of a country during a one year period a. Top dollar value is the selling price. b. New good produced this year (buy a used textbook doesn't count has to be new) c. Has to be produced on US soil to count in US GDP (produced in our borders) d. 18 Trillian dollars
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GDP
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a general rise in the level of prices i. prices go up ii. 2% a year is healthy iii. have to go up to allow wages to go up
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inflation
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a general decrease in the level of prices not very common
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deflation
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the percentage of a nation's labor force unemployed at any time 4.9% considered great
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unemployment rate
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monthly index that measures the changes in prices of a fixed basket of goods purchased by a typical consumer in an urban area
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consumer price index
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an index that measures prices that producers receive for their finished goods
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producer price index
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the recurrence of periods of growth and recession in a nation's economic activity
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business cycle
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two or more consecutive three month periods of decline in a country's GDP 2 consecutive quarter (6 months) of GDP decline (obvious)
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recession
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a severe recession that lasts longer than a typical recession and has a larger decline in business activity when compared to a recession recession with high unemployment and /or falling prices (declared by policy makers) (worse than recession) (haven't had one since great depression
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depression
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federal reserve's decisions that determine the size of the supply of money in the nation and the level of interest rates
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monetary policies
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government influence on the amount of savings and expenditures accomplished by altering that tax structure and by changing the levels of government spending
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fiscal policy
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a shortfall created when the federal government spends more in a fiscal year than it receives when the government spends more than it receives in tax revenues (one year at a time thing) (borrow the money) (bonds)
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federal deficit
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the total of all deficits accumulated debt from the deficits (every year we borrow it adds to the debt) (our debt is 19 trillion)
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national debt
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rivalry among businesses for sales to potential customers
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competition
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the market situation in which there are many buyers and sellers of a product, and no single buyer or seller is powerful enough to affect the price of a product lots of firms identical products very low barriers of entry no ads no profits in LR
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perfect competition
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the quantity of a product that buyers are willing to purchase at each of various prices
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supply
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the quantity of a product that buyers are willing to purchase at each of various prices
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demand
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the price at which the quantity demanded is exactly equal to the quantity supplied
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market price
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a market situation in which there are many buyers along with a relatively large number of sellers who differentiate their products from the products of competitors lots of firms similar but not identical products low barriers to entry lots of ads no profits in LR
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monopolistic competition
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the process of developing and promoting differences between one's products and all competitive products
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product differentiation
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a market or industry in which there are a few sellers a few firms identical or similar products high barriers to entry lots of ads economic profits
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oligopoly
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a market or industry with only one seller, and there are barriers to keep other firms from entering the industry one firm unique products very high barrier of entry ads to create demand economic profts
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monopoly
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a loose, subjective measure of how well off an individual or a society is, mainly in terms of want satisfaction thought goods and services
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standard of living
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a system of exchange in which goods or services are traded directly for other goods or services without losing money
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barter
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a method of manufacturing in which an entrepreneur distributes raw materials to various homes, where families process them into finished goods to be offered for sale by the merchant entrepreneur
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domestic system
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a system of factoring in which all the materials, machinery, and workers required to manufacture a product are assembled in one place
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factory system
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the separation of a manufacturing process into distinct tasks and the assignment of the different tasks to different individuals
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specialization
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an economy in which more effort is devoted to the production of services than to the production of goods
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service economy
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creates and maintains the conditions under which humans and nature can exist in productive harmony, that permit fulfilling the social, economic, and other requirements of present and future generations
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sustainability
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what are firms looking for?
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Honesty and integrity Willingness to work hard dependable time management skills self confidence motivated Willing to learn Communication
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4 types of management skills
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interpersonal analytical technical conceptual
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interact with those you manage: employees, coworkers, boss, customers
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interpersonal skills
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problem solving. Need to identify the problem and find different solutions and pick the best one
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analytical skills
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need to know how to do the job the employees are doing. Also help my employees to do their job. (Lower levels of management)
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technical skills
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ability to think abstractly and big picture thinking. Need to look at organization as a whole and understand the vision of the company as a whole so you can develop a strategy to get there. (Upper levels of management)
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conceptual skills
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what percent of business fail within the first 10 years
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70
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to be defined as a business, an organization must do what?
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be organized satisfy needs make profit
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• What goods and services will be produced? And how much? • How will goods and services be produced? (ethical implications are here) • For whom will the goods and services be produced? (distributing the goods and services) • Who owns or controls the factors of production? (land, labor, capital)
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basic questions
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i. Scottish political philosopher ii. Father of economics iii. 1776 published wealth of nations book iv. individuals are responsible for wealth creation. Not the gov v. private property should be owned by individuals not gov vi. econ freedom means anyone can start a business and compete vii. role of gov should be limited viii. role of gov should stay out of the market
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adam smith
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Who is responsible for wealth creation in capitalism?
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the individual
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Who owns private property in capitalism?
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the individual
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allows for competitive markets and free entry and exit by firms
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economic freedom
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US is __________ economy with 2/3 of resources privately owned and 1/3 government owned i. Consumers 70%, gov 30%
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mixed
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who says gov answers all the basic questions
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karl marx
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All resources owned by the government and all decisions made by government. Compete government control. Doesn't exist anywhere never been successful
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communism
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all large businesses owned by the government, some small businesses owned individual plus substantial welfare state/safety net (small bakery privately own, bread factory is owned and run by government) (shoe repair store is privately owned but shoe factory is owned by gov)
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socialism
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tend to be in more rural developing nations. do things bc that's how we've always done it
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traditional economy
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current US GDP
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18 trillion
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a. people who are actively looking for jobs i. Number of people who could work and trying to work ii. Able body people of working age iii. At its lowest rate in like 50 years iv. Makes unemployment rate look worse than it actually is
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labor force
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GDP decreases
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contraction
