Intro to Business - Test 1 (Chapter 1)

As the price decreases, the quantity demanded increases

As the demand curve slopes downward from left to right, this shows which of the following statements is true? a. As the price increases, the quantity demanded increases. b. As the price decreases, the quantity demanded decreases. c. There is no relationship between price and quantity supplied. d. As the price decreases, the quantity demanded increases. e. There is a positive relationship between price and quantity supplied.

Communism and Socialism

Command Economy

all resources owned by the government and all decisions made by the government

Communism

strategy, vision, seeing the big pictures

Conceptual skills

Key to measure of inflation - change in the cost of buying a fixed base of goods and services

Consumer price index

Governments debt grows when governments run deficits (government spending more than it takes in tax revenue)

Deficits and debt

Profit = sales revenue - expenses

Define profits

an organized effort to produce and sell goods and services that satisfies needs and wants for profit

Defining Business

recession with high unemployment

Depression

Adam Smith

Economic freedoms allow for competitive markets and free entry and exit by firms, who says this?

1) What goods and services will be produced? 2) How will goods and services be produced? 3) For whom will the goods and services be produced? 4) Who owns or controls the factors of production?

Every economic system must answer what 4 questions?

Government having tax rates and levels of government spending to influence aggregate demand in the economy

Fiscal policy

contraction at 2 consecutive quarters

Recession

all large businesses owned by the government, some small businesses owned individual plus substantial welfare stale safety net

Socialism

business

Studying ________________ can help you develop skills and acquire knowledge to prepare for your future career, regardless of whether you plan to work for a multinational Fortune 500 firm, start your own business, work for a government agency, or manage or volunteer at a nonprofit organization

being able to do job you are supervising

Technical skills

a description of individual personal gains benefiting others

The "invisible hand" refers to: a. a description of individual personal gains benefiting others. b. a description of the benefits of a communist economy. c. a description of the benefits of a mixed economy. d. a description of the benefits of a command economy.

equilibrium price

The price at which the quantity demanded is exactly equal to the quantity supplied is called the____________________. a. monopoly price b. equilibrium price c. fixed price d. imperfect price e. perfect price

the 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 specified time period (e.g., one-year) is called: a. the producer price index (PPI). b. the consumer price index (CPI). c. deflation. d. the gross domestic product (GDP). e. inflation.

Customers

The ultimate objective of every firm is to satisfy the needs of its __________________. a. customers b. shareholders c. regulators d. employees e. investors

a. As a consumer, you participate in business transactions almost daily b. Start investing for retirement as soon as your graduate

To Be a Better Informed Consumer/Investor

a. Honesty and integrity b. Willingness to work hard c. Dependability d. Time management e. Self confidence f. Motivation g. Willingness to learn h. Communication skills i. Professionalism

To Be a Successful Employee - What are firms looking for?

- 70% of small businesses fail within the first 10 years

To Start Your Own Business...

Controlling

To be an effective manager, which of the following is one of the four basic management functions that a manager must be able to perform? a. Programming b. Interviewing c. Controlling d. Accounting

A. Be organized - combine materials, people and money in a way that produces outputs B. Satisfy Needs - firms that don't do this don't survive C. Make Profits

To be defined as a business, an organization must?

An economy in which production is based on customs and traditions and economic roles are typically passed down from one generation to the next

Traditional economy

1) Capitalism 2) Mixed Economy 3) Command Economy 4) Traditional economy 5) Micro- vs. Macroeconomics

Types of Economic Systems

# of unemployed divided by labor force

Unemployment rate

peak, recession, trough, recovery

What are the four phases in the typical business cycle? a. Peak, recession, the trough, and recovery b. Peak, recession, deficit, and recovery c. Peak, depression, inflation, and recovery d. Inflation, recession, deflation, and recovery e. Peak, recession, depression, and recovery

- laissez-faire = no gouvernement interférence - only act as rule maker & umpire

What is the role of government according to Adam Smith?

Stakeholders

What is the term for all of the different people or groups of people that are affected by the policies, activities, and decisions of a business and whose concerns the business needs to address? a. Employees b. Owners c. Stakeholders d. Community members e. Stockholders

business owner

When considering the relationship between profits and business risks, which group of people is paid last? a. Employees b. Business owners c. Lenders d. Suppliers

fiscal policy

When the government attempts to influence the amount of savings and expenditures by altering the tax structure it is using _______ to offset the effects of a recession or depression. a. producer price index (PPI) b. monetary policy c. consumer confidence index d. fiscal policy e. consumer price index (CPI)

The producer price index (PPI)

Which measure is an accurate predictor of both changes in the consumer price index (CPI) and prices that consumers will pay for many everyday necessities? a. The producer price index (PPI) b. The gross domestic product (GDP) c. The unemployment rate d. Deflation e. Inflation

Profit is what remains after all business expenses have been deducted from sales revenue

Which of the following statements best defines "profit"? a. Profit is the payments to suppliers and lenders. b. Profit is what remains after all business expenses have been deducted from sales revenue. c. Profit is earned when a firm's expenses are greater than its sales revenues. d. Profit is all the resources used in a business process.

Productivity growth can lead to higher unemployment rates

Which statement is true regarding economic performance? a. When productivity increases, it takes more workers to produce the same number of goods and services. b. Productivity growth can lead to higher salary expenses for employers. c. Productivity growth is always good for employers and employees. d. Productivity growth can lead to higher unemployment rates

Monopolistic competition

Which term describes the purely competitive market structure where many buyers are trying to satisfy a similar need with uniquely branded products from a relatively large number of sellers (e. g., sports-drinks)? a. Natural monopoly b. Product differentiation c. Monopolistic competition d. Oligopoly e. Limited monopoly

mixed economy

While the United States' economic system is rooted in laissez-faire capitalism, its government collects taxes and provides services (such as national defense and education), making the United States a ___________________________. a. socialist economy b. mixed economy c. communist economy d. command economy e. market economy

Captialism

______ is an economic system based on free markets, in which all or most of the factors of production and distribution are privately owned and operated for profit. a. Mixed economy b. Command economy c. Socialism d. Capitalism e. Communism

economic system based on private property and free enterprise

define capitalism

decrease in the level of prices

deflation

going up

expansion

1) small business 2) large business 3) small business owner

name 3 types of businesses

- Scottish economist - Book: Wealth of Nations

who is Adam Smith

Concern of private individuals, not the government

who is responsible for wealth creation according to Adam Smith?

Individuals

who owns private property according to Adam Smith?

Measures wholesale price levels in the economy

Producer price index

taking on risks

Profits are the rewards to the owners for ____________________

Changing the interest rate and influencing the money supply

Monetary policy

identify problems and come up with solutions

Analytical skills

Human resources, material resources, informational resources, and financial resources

For a business to organize and be successful, which of the following four resources must it effectively combine and use? a. Informational resources, material resources, stockholder resources, and financial resources b. e-Business resources, human resources, financial resources, and material resources c. Informational resources, financial resources, time management resources, and human resources d. Human resources, shareholder resources, informational resources, and material resources e. Human resources, material resources, informational resources, and financial resources

- Total $ value of all goods and services produced in US in a year - Currently about $18T in US.

Gross Domestic Product (GDP)

competition

In a capitalistic economy, _______ ensures that a firm will survive only if it serves its customers well by providing products and services that meet needs. a. demand b. equilibrium price c. competition d. supply e. market price

two

In general, economists define a recession as _______ or more consecutive three-month periods of decline in a country's GDP. a. five b. four c. one d. two e. three

conceptual skills

In order to perform management functions, a manager must possess the ability to think in abstract terms in order to see the "big picture." This skill is known as a(n):

rise in the level of prices

Inflation

one-on-one conversations or small group

Interpersonal skills

- stockholders - managers - customers - community, society, and nation-state - suppliers & distributors - Employees

List the types of stakeholders

- Microeconomics = study of economics at an individual, group, or company level - Macroeconomics = Study of the economy as a whole

Micro vs Macroeconomics

- mix of capitalism and command economy - US is mixed, with 2/3 of resources privately owned and 1/3 government owned

Mixed Economy