Introduction to Business Chapter 1-6 – Flashcards

The total amount of money a business takes in during a given period by selling goods and services.

The amount a business earns above and beyond what it spends for salaries and other expenses.

the chance an entrepreneur takes of losing time and money on a business that may not prove profitable.

the part of economic study that looks at the operation of a nation's economy as a whole.

A phrase coined by Adam Smith to describe the process that turns self-directed gain into social and economic benefits. Basically, this meant that a person working hard to make money for his or her own PERSONAL INTEREST would (like an invisible hand) also BENEFIT OTHERS.

the movement of goods and services among nations without political or economic obstruction.

Imports, exports, global trade

Enables a nation to produce what it is most capable of producing and buy what it needs from others in a mutually beneficial exchange relationship.

States that a country should sell to other countries those products that it produces most effectively and efficiently and should buy from other countries those products that it cannot produce as effectively or efficiently.

Countries with abundant natural resources need technological resources from other countries. Global trade allows countries to produce what they make best and buy what they need from others includes Comparative Advantage and Absolute Advantage.

Society's accepted standards of moral behavior, that is, behaviors accepted by society as right rather than wrong.

Sole proprietorship, partnership, corporation are the three major forms of business ownership. Solo proprietorship is a business that is owned, and usually managed, by one person; it is the most common form. Partnership is a legal form of business with two or more owners. Corporation is a legal entity with authority to act and have liability separate from its owners.

For solo proprietorship, its advantage is ?Ease of STARTING AND ENDING the business and its disadvantage is LIMITED FINANCIAL RESOURCES: Financing is limited to the funds that the sole owner can gather. For partnership, its advantage is MORE FINANCIAL RESOURCES: Two or more people can pool their money and credit and its disadvantage is UNLIMITED LIABILITY: ?Each GENERAL PARTNER is liable for the debts of the firm, no matter who was responsible for causing those debts. You are liable for your partners' mistakes as well as your own. For corporation, its advantage is LIMITED LIABILITY: The owners of a business are responsible for losses only up to the amount they invest and its disadvantage is DOUBLE TAXATION: Corporate income is taxed twice.

Any activity that seeks to provide goods and services to others while operating at a profit.

All the people who stand to gain or lose by the policies and activities of a business. All stakeholders are customers, employees, stockholders, suppliers, bankers, and people in the local community, environmentalists, and elected leaders.

Positive impact on both the standard of living and quality of life.

Price in a free market are not determined by sellers; rather, buyers and sellers are negotiating in the marketplace determine price. Price is determined through the economic concepts of supply and demand. Supply is the quantity of products that manufacturers or owners are willing to sell at different prices at a specific time. Demand is the quantity of products that people are willing to buy at different prices at a specific time.

The degree of competition in which a large number of sellers produce very similar products that buyers nevertheless perceive as different.

The practice of selling products in a foreign country at lower prices than those charged in the producing country. There is also evidence that some governments subsidize certain industries to sell goods in global markets for less.

An arrangement whereby someone with a good idea for a business sells the rights to use the business name.

A long-term partnership between two or more companies established to help each company build competitive market advantages.

An organization that manufactures and markets products in many different countries and has multinational stock ownership and multinational management.

The use of government regulations to limit the import of goods and services.

consists of monthly statistics that measure the pace of inflation or deflation.

A general rise in the prices of goods and services over time.

The total value of final goods and services produced in a country in a given year. Both domestic and foreign-owned companies can produce goods and services included in GDP. A major influence on the growth of GDP is how productive the workforce is.

A person who risks time and money to start and manage a business.