Chapter 1 - Exploring the World of Business and Economics
In a capitalistic economy, what ensures that a firm will survive only if it serves its customers well by providing products and services that meet needs?
competition
the ultimate objective of every firm is to satisfy the needs of its:
customers
Cultural (or workplace) diversity
differences among people in a workforce owing to race, ethnicity, and gender
monetary policies
federal reserve's decisions that determine the size of the supply of money in the nation and the level of interest rate
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 that tax structure and by changing the levels of government spending
What can productivity growth (economic performance) lead to?
higher unemployment rates
For a business to organize and be successful, which of the following four resources must it effectively combine and use?
human resources, material resources, informational resources, and financial resources
While the US economic system is rooted in laissez-faire capitalism, its government collects taxes and provides services, making the US a:
mixed economy
What are the 4 phases in the typical business cycle?
peak, recession, the trough, and recovery
What are the 4 basic management functions?
planning, organize, leading/motivating, controlling
factors of production
resources used to produce goods and services
competition
rivalry among businesses for sales to potential customers
sustainability
the ability to maintain or improve standards of living without damaging or depleting natural resources for present and future generations
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 info about products or services
Business
the organized effort of individuals to produce and sell, for a profit, the goods and services that satisfy society's needs
E-business
the organized effort of individuals to produce and sell, for a profit, the goods and services that satisfy society's needs through the facilities available on the Internet
unemployment rate
the percentage of a nation's labor force unemployment at any time
market price
the price at which the quantity demanded is exactly equal to the quantity suppled
equilibrium price
the price at which the quantity demanded is exactly equal to the quantity supplied
product differentiation
the process of developing and promoting differences between one's products and all competitive products
demand
the quantity of a product that buyers are willing to purchase at each of various prices
business cycle
the recurrence of periods of growth and recession in a nation's economic activity
Specialization
the separation of a manufacturing process into distinct tasks and the assignment of the different tasks to different individuals
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 specified time period - usually 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
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
As the demand curve slopes downward from left to right, this shows which of the following statements is true?
As the price decreases, the quantity demanded increases
When considering the relationship between profits and business risks, which group of people is paid last?
Business owners
Conceptual skill
In order to perform management functions, a manager must possess the ability to think in abstract terms in order to see the "big picture."
economists generally define a recession as how many consecutive months periods?
Two or more
deflation
a general decrease in 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 a society is, mainly in terms of want satisfaction through goods and services
Oligopoly
a market (or industry) in which there are few sellers
Monopoly
a market (or industry) with only one seller, and there are barriers to keep other firms entering the industry
monopolistic competition
a market in which there are many buyers along with a relatively large number of sellers who differentiate their products from the products of competitors
Domestic System
a method of manufacturing in which an entrepreneur distributes raw materials to various homes, where families process them into finished good 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
Entrepreneur
a person who risks time, effort, and 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
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 individual's 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
market economy
an economic system in which businesses and individuals decide what to produce and buy, and the market determines quantities sold and prices
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 gov. decides what goods and services will be produced, how they will be produced, for whom available 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 goods
mixed economy
an economy that exhibits elements of both capitalism and socialism
Producer Price Index (PPI)
an index that measures prices that producers receive for their finished goods
supply
an item facilities production and operations but does not become part of a finished product