MRKT Exam 2 (Ch.1,2,3,5)

core goals of businesses
generate long-term profits by delivering value to customers
loss
happens when expenses are greater than revenue
entrepreneurs
risk their time, money, and other resources
cons of entrepreneurship era
dominated markets, forcing out competitors, manipulating prices, exploiting workers, and decimating the environment
production era
known for efficiency, jobs became more specialized, increasing productivity and lowering costs and prices
relationship era
built long-term relationships with customers and gain their loyalty
marketing era
consumers had many choices and businesses began distinguishing brands for them
natural resources
land, fresh water, wind, mineral resources
capital
machines, tools, buildings, information, technology
four factors of production
natural resources, capital, human resources, entrepreneurship
human resources
physical, intellectual, creative contributions of everyone who works within the economy
what freedom do entrepreneurs need?
freedom of choice, (who to hire, what to produce), freedom from excess regulation and taxation, protection from corruption and unfair competition
five dimensions of the broader business environment
economic, competitive, technological, social, global
nonprofit organizations are known for supporting…
health, human services, education, art, religion, culture
Nonprofit organizations are not in the business of…
financial gain
demographics
differences in age, gender, religion, nationality
socialism
economic system based on the principle that the government should own and operate key enterprises that directly affect public welfare
what is the key reason to study economics from the business perspective?
guide your decision-making by offering a deeper understanding of the broad forces that affect both your business and your personal life
macroeconomics
study of a country’s overall economic dynamics, such as the employment rate, gross domestic product, and taxation policies.
microeconomics
focuses on smaller economic units such as individual consumers, families, and individual businesses
refers to actions that shape the economy by influencing interest rates and the supply of money
federal reserve- nations central bank
what does the M2 money supply include?
All of M1 plus most savings accounts, money market accounts, and certificates of deposit (low-risk savings vehicles with a fixed term, typically less than one year)
who is responsible for the control of the money in the US?
federal government and federal reserve
how do banks help increase the money supply?
loans
M1
all currency—paper bills and metal coins—plus checking accounts and traveler’s checks
fiscal policy
refers to government efforts to influence the economy through taxation and spending decisions that are designed to encourage growth, boost employment, and curb inflation
budget surplus
revenue is higher than spending
budget deficit
spending is higher than revenue and must borrow money to cover the shortfall
monetary policy
refers to actions that shape the economy by influencing interest rates and the supply of money
what 3 key tools does the Fed use to expand/contract the money supply?
open market operations, discount rate changes, and reserve requirement changes
primary way Fed controls supply of money
open market operations
capitalism
also known as a “private enterprise system” or a “free market system”, private ownership, fair competition, economic freedom
oligopoly
market structure with only a handful of competitors selling products that can be similar or different
monopoly
market structure with just a single producer completely dominating the industry, leaving no room for any significant competitors
supply
refers to the quantity of products that producers are willing to offer for sale at different market prices
demand
refers to the quantity of products that consumers are willing to buy at different market prices
contraction
period of economic downturn, marked by rising unemployment
recovery
period of rising economic growth and increasing employment, following a contraction
expansion
period of robust economic growth and high employment
foreign licensing
involves a domestic firm granting a foreign firm the rights to produce and market its product or to use its trademark/patent rights in a defined geographical area
foreign franchising
offers other businesses, or franchisees, the right to produce and market its products if the franchisee agrees to specific operating requirements—a complete package of how to do business
key infrastructures to consider
transportation, energy, communication, finance
sustainability
doing business today without harming ability of future generations