Ch. 1 The U.S. Business Enviroment

Technological Environment

includes the ways a company creates value through human​ knowledge, work​ methods, physical​ equipment, electronics and​ telecommunications, and processing systems.

natural monopoly

industry in which one company can most efficiently supply all needed goods or services

China economy

is a communist​ country, they now function as a​ mixed-market economy instead of a​ pure-communist-based economy. Is increasingly allowing private ownership and​ entrepreneurship, with government oversight.

Communism

is a system in which the government owns and operates all factors of​ production, owns all​ businesses, and controls business decisions such as what to​ make, how much to​ charge, etc.

planned economy

is one in which a centralized government controls most factors of production. Ex. socialism and communism

The equilibrium​ price or market​ price

is the point where the amount of goods demanded and the amount of product supplied are the same.

economic system

is the system a country uses to allocate its resources among its citizens.

The factor of production that includes the physical and intellectual contributions people make while engaged in economic production is known as​ _____

labor

According to the​ ________, producers offer more product for sale as prices rise and less as prices fall

law of supply

privatization

process of converting gov enterprises into privately owned companies

law of​ supply

producers are willing to offer more product as prices increase and will offer less product as prices fall

Economic Environment

relevant conditions that exist in the economic system in which a company operates. During the recent​ recession, many people were looking for jobs and companies were able to hire employees for a lower wage. This is an example of how the​ ________ environment can affect business

Political-Legal Enviroment

represents the relationship between business and​ government, usually in the form of government regulation.

Labor

sometimes called human resources or human​ capital, includes the physical and intellectual contributions of people who are engaged in economic production.

The pattern of expansions and contractions in a​ nation's economic system is referred to as​ _____

the business cycle

Balance of Trade

the difference between a country's total exports and total imports

Profits

the excesses of money earned from sales over the expenses of the business. The prospect of earning profits encourages entrepreneurs to invest time and money to open and expand businesses. difference between a​ business's revenues and its expenses

business cycle

the pattern of​ short-term ups and downs​ (expansions and​ contractions) in an economy

aggregate output

the total quantity of goods and services produced by an economic system within a specific period of time.

gross domestic product​ (GDP)

the total value of all goods and services produced within a given period by a national economy through domestic factors of production

perfect competition

to exist there must be many smaller companies in the market with similar products so that no one company is powerful enough to influence product prices.

Purchasing Power Parity

a measure of how many units of currency are needed in one country to buy the amount of goods and services that one unit of currency will buy in another country

recession

a period during which aggregate output declines (2 quarters)

The​ ________ is the total quantity of goods and services produced by an economic system within a specific period of time.

aggregate output

market economy

allows for free​ enterprise, so production and price are mostly determined by supply and demand.

One of the benefits of a healthy business environment is​

an increased standard of living

Oligopoly

A market structure in which a few large firms dominate a market

Private enterprise system

An economic system in which individuals and groups, rather than the government, own or control the means of production

economic growth

If GDP​ (gross domestic​ product) is​ rising, then aggregate output is going up

John owns a restaurant and business is so good that he is thinking about enlarging his building so he can accommodate more customers. John is operating in a​ ________ economy.

Market

The U.S. economy is BEST classified as a​ _______.

Mixed market economy- Even though the United States strives to be as free and open as​ possible, certain activities are restricted by government​ laws, rules and regulations.

What is the BEST example of a perfectly competitive​ market?

Soybeans

Gross National Product (GNP)

The total value of all goods and services produced by a country's economy in a given year. It includes all goods and services produced by corporations and individuals of a country, whether or not they are located within the country.

oligopoly

generally only a few large suppliers or sellers of a product or service. The entry of new competitors is difficult because large capital investment is needed.

equilibrium​ price

When demand and supply curves are plotted on the same​ graph, the point at which they intersect is the market price​, which is the point at which the quantity of goods demanded and the quantity of goods supplied are equal

Shortage

When the price of goods drops below the market equilibrium​ point, consumers will demand more goods than suppliers are willing to produce. there are not enough resources available to produce goods​ demanded

The economic system in which the government owns and operates all factors of production and makes all business decisions is known as​ ___

communism

Sociocultural Environment

consists of the values and customs of the society where the company​ operates, and the ethical standards that the company adopts.

Perfect competition

depends on a large number of small firms all producing identical products. 1.

mixed market economy

economic system featuring characteristics of both planned and market economies

External Environment

everything inside an organizations boundaries that might effect it. Including the national/international economy, technology, government & legal, nature, demographic and social structure

monopoly

exists when consumers have only one company from which they can get a specific product.

consumer price index

measures the prices of products typically purchased by​ consumers, and is used to measure inflation.

Monopolistic competition

occurs when many companies are attempting to make their product seem different from that of their competitors. Differentiating strategies include brand​ names, design or​ styling, and advertising. Competition forces businesses to make products better or cheaper.

Socialism and communism are examples of a​ ____

planned economy