Foundations of Business Chapter 1
marketing intermediaries
Best Buy and Walmart are examples of this
monetary policies
Federal Reserve's decisions that determine the size of the supply of money in the nation and the level of interest rates
deflation
a general decrease in the level of prices
inflation
a general rise in the level of prices
standard of living
a loose subjective measure of how well off an individual or society is, mainly in terms of what satisfaction through goods and services
oligopoly
a market (or industry) in which are few sellers
monopoly
a market (or industry) with only one seller and there are barriers to keep other firms from entering the industry
domestic system
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
consumer price index (CPI)
a monthly index that measures the changes in prices of a fixed basket of goods purchased by a typical consumer in an urban area
loss
a negative profit which results when a firm's expenses are greater than its sales revenue
entrepreneur
a person who risks time, effort, and invests money to start and operate a business
depression
a severe recession that lasts longer than a typical recession and has a larger decline in business activity when compared to a recession
federal deficit
a shortfall created when the federal government spends more in a fiscal year than it receives
barter
a system of exchange in which goods or services are traded directly for other goods or services without using money
factory system
a system of manufacturing in which all the materials, machinery, and workers required to manufacture a product are assembled in one place
invisible hand
a term created by Adam Smith to describe how an individuals personal gain benefits others and a nation's economy
stakeholders
all the different people or groups of people who are affected by an organization's policies, decisions, and activities
capitalism
an economic system in which individuals own and operate the majority of businesses that provide goods and services
command economy
an economic system in which the government decides what goods and services will be produced, and who owns and controls the major factors of production
service economy
an economy in which more effort is devoted to the production of services than to the production of goods
mixed economy
an economy that exhibits elements of both capitalism and socialism
producer price index (PPI)
an index that measures process that producers receive for their finished goods
wealth
anything of value
sustainability
creating and maintaining the conditions under the humans and nature can exist in productive harmony while fulfilling the social, economic, and other requirements of present and future generations
laissez-faire
describes Smith's capitalistic system and implies that there should be no government interference in the economy. "let them do"
cultural (or workplace) diversity
differences among people in a workforce owing to race,ethnicity, and gender. The ability to work well with many types of people in the workplace.
market economy (free-market economy)
economic system in which businesses and individuals decide what to produce and buy, and the market determines quantities sold and prices
Adam Smith is the father of communism and advocated a classless society. T or F
false
Fiscal policy determines the level of interest rates. T or F
false
For a business to be organized, it must combine four types of resources, workers, natural resources, capital, and ownership. T or F
false
The majority of small business firms are successful at the end of ten years. T or F
false
Under communism, individual consumers determine what will be produced. T or F
false
consumer products
goods and services purchased by individuals for personal consumption
fiscal policy
government influence on the amount of savings and expenditures; accomplished by altering the tax structure and by changing the levels of government spending
material resources
include raw materials used in manufacturing processes as well as buildings and machinery. Ex: Mrs Fields Cookies
monopolistic competition
market situation in which there are many buyers along with a relatively large number of sellers who differentitate their products from the products of competitors
4 kinds of resources a business need to be organized
material, human, financial, and informational
financial resources
money required to pay employees, purchase materials, and generally keep the business operating
business
organized effort of individuals to produce and sell, for a profit, the goods and services that satisfy society's needs. Refers to all such efforts within a society
human resources
people who furnish their labor to the business in return for wages
4 types of competition
perfect, monopolistic, oligopoly, monopoly
product differentitation
process of developing and promoting differences between one's products and all competitive products: distinguishing Colgate from Crest toothpaste
factors of production
resources used to produce goods and services
competition
rivalry among businesses for sales to potential customers
2 types of economic systems
socialism and communism Examples of command economy
information resource
tells the managers of the business how effectively the other three resources are being combined and used
productivity
the average level of output per worker per hour
perfect (or pure) competition
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 that product
social media
the online interaction that allows people and businesses to communicate and share ideas, personal information, and information about products or services
unemployment rate
the percentage of a nations labor force unemployed at any time
market price
the price at which the quantity demanded is exactly equal to the quantity supplied
demand
the quantity of a product that buyers are willing to purchase at each of various prices. The relationship b/w prices and the quantities purchased by buyers.
supply
the quantity of a product that producers are willing to sell at each of various prices
business cycle
the recurrence of periods of growth and recession in a nations economic activity
specialization
the separation of a manufacturing process into distinct tasks and the assignment of the different tasks to different tasks to different individuals. The process of separating work into distinct tasks.
economics
the study of how wealth is created and distributed
microeconomics
the study of the decisions made by individuals and businesses
macroeconomics
the study of the national economy and the global economy
free enterprise
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
gross domestic product (GDP)
the total dollar value of all goods and services produced by all people within the boundaries of a country during a one-year period
national debt
the total of all federal deficits
economy
the way in which people deal with the creation and distribution of wealth
A business cycle consists of four states: peak, recession, trough, and recovery. T or F
true
Hewlett-Packard Corporation and Dell Computer use product differentiation in the marketplace. T or F
true
If a firm's sales revenues exceed its expenses, the firm has earned a profit. T or F
true
The equilibrium price means that the supply and demand for a product are in balance. T or F
true
The ultimate objective of business firms should be to satisfy the needs of their customers. T or F
true
recession
two or more consecutive three-month periods of decline in a country's GDP
profit
what remains after all business expenses have been deducted from sales revenue