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

core goals of businesses
generate long-term profits by delivering value to customers

happens when expenses are greater than revenue

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

machines, tools, buildings, information, technology

four factors of

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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

differences in age, gender, religion, nationality

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

study of a country’s overall economic dynamics, such as the employment rate, gross domestic product, and taxation policies.

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?

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

also known as a “private enterprise system” or a “free market system”, private ownership, fair competition, economic freedom

market structure with only a handful of competitors selling products that can be similar or different

market structure with just a single producer completely dominating the industry, leaving no room for any significant competitors

refers to the quantity of products that producers are willing to offer for sale at different market prices

refers to the quantity of products that consumers are willing to buy at different market prices

period of economic downturn, marked by rising unemployment

period of rising economic growth and increasing employment, following a contraction

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

doing business today without harming ability of future generations

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