Intro to Business - Study Guide #1
determinants of demand
- changes in income levels - population changes - consumer preferences - complementary goods - substitute goods
What are the various degrees of competition?
- monopoly - duopoly - oligopoly - monopolistic competition - perfect competition
Define each degree of competition and understand the characteristics of each degree of competition
- monopoly: occurs when there is only one provider of a service or a good and no substitutes exist - duopoly: only two suppliers exist in an industry or have dominant control - oligopoly: only a few sellers exist, and each seller gas a fairly large share of the market - monopolistic competition: many buyers and sellers and little differentiation exists between the products, but there is a perceived difference among consumers - perfect competition: many buyers and sellers of virtually identical products; no barriers to market entry
What are the different ethical systems?
- moral relativism (perspective that holds that there is no universal moral truth ; there are only people's individual beliefs, perspectives, and values) - situational ethics (people make decisions based on a specific situation instead of universal laws) - Judeo-Christian ethics (common set of basic values shared across both Jewish and Christian religious traditions)
What are the four stages of the business cycle?
- peak - recession - trough - expansion or recovery
What are the different types of economic systems?
- planned (or controlled) economies - market economies - mixed economies
determinants of supply
- technology changes - changes in resource prices - price expectations - the number of suppliers - the price of substitute goods
What approaches can a company use to develop and maintain an ethical environment?
1. Ethical focus from the start 2. Ethical focus every day - ethics training programs
How does someone create a personal code of ethics?
1. Write down what kind of person you are. 2. List the beliefs that influence your decision making. 3. Now that you have your beliefs written down, think about how you came to believe them. 4. Consider your behavior with regard to the places you work, study, and live and how you relate to people around you.
What strategies can a company use to recover from an ethical lapse?
1. work to find a leader 2. restructure internal operation 3. redesign internal rewards
How does the economic indicator price indices reflect economic health?
CPI (complex price index) and PPI (producer price index) measure purchasing power and consequently trigger some business decisions
How do competition, the social environment, globalization, and technology changes challenge and provide opportunities to business owners?
Competition - customer satisfaction and beyond, social networking, and employee empowerment; Social environment - Aging population, increasing workforce diversity, the green movement, and the social environment and you; Globalization - Increased competition from international companies, fluctuations in the value of the U.S. dollar, security and patent protection concerns, and unstable political climates in foreign countries. Technology changes - E-commerce, online security, and privacy
How does personal ethics play a role in the workplace?
Employers may have a say over employees' behavior outside the office if that behavior may affect the company for which he or she works.
What are the factors of production?
Factors of production are the resources that a business uses to produce goods and services.
How do for-profit businesses and not-for-profit organizations compare?
For-profit business can reward its employees, increase its productivity, or expand its business into new areas. Not-for-profit organizations do not go into business to pursue profits for their owners. Instead, they seek to service their communities through social, educational, or political means.
What is the difference between a good and a service?
Goods are physical products a business sells A service refers to an intangible product that is bought or sold.
How do life skills translate to the business environment
Similar to a small company, life requires careful planning, precise record keeping, and openness to change.
What are the principles of supply and demand?
Supply refers to how much of a good or a service is available for purchase at any given time. Demand refers to how much of a good or a service people want to buy at any given time.
Why is globalization a controversial subject for so many people?
Though decreasing the producing costs can lower the products prices, it can also make workers in the U.S, lose their jobs to workers overseas.
What are some of the benefits of business competition?
Wider variety of better and cheaper goods and services, aggressive brand promotion, focus on customer satisfaction
DeJean has a successful landscaping business in which he mows lawns, weeds flower beds, and trims hedges. Last summer, he bought a brand new mower and hired a helper. The supply curve for DeJean's business would shift in which direction? a. to the right b. to the left c. no change would occur d. there is a shift along the demand curve only
a
Which of the following is a good example of microeconomics? a. How a specific company would maximize its production and capacity so it could better compete in its industry b. How an increase in the unemployment rate would affect a country's GDP c. How a decrease in taxation affects consumer spending d. All of the above
a
Which of the following is an example of the government fiscal policy to stimulate an economy? a. increase government spending b. increase taxes c. decrease the discount rate d. sell government securities in open markets
a
Which of the following strategies is not designed to help a company recover from an ethical lapse? a. Ensuring that the whistle-blower faces legal consequences b.Working to find a leader who will set an example of the new ethical image of the company c. Restructuring internal operations to empower all employees to consider ethical implications of decision and allowing them to feel free to speak up when they have concerns d. Redesigning internal rewards-for example, restructuring the incentive package for a sales department so that there is a financial reward for building a relationship with a client rather than just closing a sale
a
corporate social responsibility (CSR)
a company's obligation to conduct its activities with the aim of achieving social, environmental, and economic development
Which of the following are factors of production? a. Labor, natural resources, capital, entrepreneurs, technology, and intellectual property. b. Labor, capital, entrepreneurs, motivation, and good ideas c. Natural resources, entrepreneurs, profits, and creativity d. Labor, profits, natural resources, technology, and motivation
a. Labor, natural resources, capital, entrepreneurs, technology, and intellectual property.
Which of the following is NOT a common challenge facing most national companies? a. Undercapitalization b. A complex supply chain c. Complying with each state's different tax rates d. Differences in state laws
a. Undercapitalization
B2B and B2C interactions are a. common now because of the explosive growth of e-commerce b. important only for business, not consumers c. two different names for the same thing d. dominated by sole proprietorships
a. common now because of the explosive growth of e-commerce
communism
an economic system in which a state's government makes all economic decisions and controls all the social services and many of the major resources required for the production of goods and services
capitalism
an economic system that allows such freedom of choice and encourages private ownership of the resources required to make and provide the goods and the services we enjoy
whistle-blower
an employee who reports misconduct, most often an authority outside the firm
How does the economic indicator productivity reflect economic health?
an increase in productivity indicates that workers are producing more goods or services in the same amount of time, resulting in lower prices and costs.
CSR can be measured by a. a company's rate of growth b. organizations that monitor and rank performance on social issues c. the happiness level of employees in a company d. businesses that have a high profit margin and gross sales
b
Ethics are based on a. the current popular culture b. religious, cultural, or ethic systems c. society's legal system d. each situation and the moral consequences of an action
b
Jackson Paulson works as a waterskiing instructor Migis Lodge on Sebago Lake. He claims unemployment from October through April. Jackson experiences which type of unemployment? a. Frictional b. Seasonal c. Cyclical d. Structural
b
Personal ethics collide with business ethics a. whenever there is a claim of sexual harassment b. when a business owner tries to control employees' behavior outside of work c. if employees try to dictate corporate policies d. none of the above
b
Racerback Swimwear, an Australian company, opens a factory near Tallahassee, Florida. The value of the swimsuits produced in the new Florida factory is included in which country's GDP. a. Australia b. United States c. Both d. It is not included in the GDP al all
b
The practice of corporate philanthropy a. is only a marketing strategy b. can build stronger relationships with employees the and the community at large c. states that success can be found by competing fiercely to provide lowest prices d. is a strategy that works only in certain segments of industry where there is a lot of media attention
b
Which of the following is a determinant of demand? a. Technology changes b. Changes in income levels c. Price of substitute goods d. Change in the price of resources
b
Goods are products a business sells like a. haircuts b. conveyer belts c. car insurance d. health care
b. conveyer belts
Social networking makes it possible for a. companies to better manage their employees. b. customers to spread the word about great products c. companies to keep network information secure d. social gatherings to be monitored
b. customers to spread the word about great products
If a firm decides to shift the production of goods or services to an overseas company, this firm is a. diversifying b. offshoring c. telecommuting d. forming a partnership
b. offshoring
To avoid debt, a new business owner should have enough projected revenue to cover expenses for the first a. six months b. year c. two years d. five years
b. year
unethical behavior
behavior that does not conform to a set of approved standards of social or professional behavior
mixed economy
blend of market and planned economies
A business is in legal compliance if a. it follows all the the laws of which it is aware b. it cannot be proven guilty of violating any laws c. it meets all local, state, and federal regulations d. it hires only employees who do not have criminal records
c
Ethical sourcing means that a. people should make ethical decisions based on a particular situation b. there is one accepted source for guiding ethical decision making c. a company follows accepted conduct when acquiring raw materials from suppliers d. companies will not work with international suppliers
c
The tobacco industry is represented by five companies in the international market. This represents a. perfect competition b. monopolistic competition c. oligopoly d. none of the above
c
There are four pizza parlors in your town. You can choose to buy pizza from whichever shop you want, and the restaurants can charge whatever price they feel is best. This situation defines what kind of economic system? a. communism b. planned economy c. market economy d. socialism
c
Which of the following tracks the prices of goods and resources sellers use to create their products? a. GDP b. CPI c. PPI d. GNP
c
It is important to understand the challenges of business because a. everyone owns a business at some point in their lives b. as online business opportunities grow you will be employed online c. there are many ways your own life needs to be managed like a business d. none of the above
c. there are many ways your own life needs to be managed like a business
What factors affect quantity demanded?
change in prices
What factors affect quantity supplied?
change in prices
multinational enterprise
companies that have operation in more than one country
What challenges does a company face in balancing the demands of social responsibility with successful business practices?
company's need to produce profit for its shareholders and the demands of quality in the product it delivers to customers; competing interests
legal compliance
conducting a business within the boundaries of all the legal regulations of that industry
A company's ethics can be examined by a. following its stock price b. interviewing employees c. checking documents filed when it was incorporated d. reviewing its code of ethics and mission statement
d
A corporation can behave in a socially responsible way by a. having strong policies in place to help the community b. acting to reduce the negative impact a company has on the environment c. being truthful with consumers in its market d. all of the above
d
A social audit a. defines the marketing direction for a business b. is a set of principles that defines how to measure the success of a business c. indicates how well a company is doing at keeping good relationships with its neighbors d. is a study of how well a company is meeting its social responsibilities
d
What results when economy begins to slow down due to decreased spending? a. inflation b. deflation c. expansion d. recession
d
Which of the following is a current sociocultural trend? a. A decrease in the overall U.S. population b. An increase in the population of Americans ages 30 to 45 years old c. A decrease in the U.S. minority population d. An increase in the population of Americans ages 65 and over
d. An increase in the population of Americans ages 65 and over
Companies are placing greater decision-making responsibilities on a. new layers of management b. the political leadership of foreign countries c. the regulatory commissions of the federal government d. employees directly
d. employees directly
What factors affect demand?
determinants of demand
What factors affect supply?
determinants of supply
profit
earned when a company's revenue (the money it brings in) is greater than its expenses (the money it pays out)
business
entity that offers products (goods or services) to their customers to earn a profit.
How does legal compliance affect ethical conduct?
flagrant violations of ethical conduct led to outside agencies levying huge penalties
social ethics
general nature of morals and the specific moral choices a person makes involving the society
substitute goods
goods that can be used in place of other goods
Labor is a factor of production that refers to any physical or ________ work people contribute to a business's production.
intellectual
social responsibility investing (SRI)
investing only in companies that have met a certain standard of CSR (corporate social responsibility)
What are the four types of businesses?
local, regional, national, and multinational
undercapitalization
occurs when a business owner cannot gain access to adequate funding.
price fixing
occurs when a group of companies agree among themselves to set a product's prices, independent of market demand or supply
example of real capital
office buildings
equilibrium price
or market price, the price at which supply equals demand
moral relativism
perspective that holds that there is no universal moral truth; instead, there are only people's individual beliefs, perspectives, and values
personal ethics
principles that guide the decisions you make in your life
complementary goods
products or services that go with each other and are consumed together
socialism
provides that the government owns or controls many basic businesses and services so that profits can be distributed evenly among the people
e-commerce
purchasing good over the internet; consists of three different kinds of business: business-to-consumer (B2C), business-to-business (B2B), and consumer to consumer (C2C)
"legal compliance"
refers to conducting a business within the boundaries of all the legal regulations of that industry
How does profit differ from revenue?
revenue - the money a company brings in profit - revenue minus expenses
entrepreneur
someone who assumes the risk of creating, organizing, and operating a business and directs all of a business's resources. Entrepreneurs also effectively manage an enterprise.
legal regulations
specific laws governing the products or processes of a specific industry
code of ethics
statement of commitment to certain ethical practices
How does the government use its fiscal policy to control swings in the business cycle?
the government determines the appropriate level of taxes and spending
How does the government use its monetary policy to control swings in the business cycle?
the government manages the supply of money
fed funds rate
the interest rate that banks charge other banks when they borrow funds overnight from one another
business cycle
the natural periodic increases and decreases in the economy
sustainability
the process of working to improve the quality of life in ways that simultaneously protect and enhance the earth's life support system
microeconomics
the study of how individual businesses, households, and consumers make decisions to allocate their limited resources in the exchange of goods and services
economics
the study of how individuals and businesses make decisions to best satisfy wants, needs, and desires with limited resources
macroeconomics
the study of the behavior of the overall economy
ethics
the study of the general nature of morals and the specific moral choices a person makes
How does the economic indicator unemployment rate reflect economic health?
unemployment rate affect unemployment benefits and government spending on social programs, mental stresses and physical illnesses, and crime index
amoral behavior
when a person has no sense of right and wrong and no interest in the moral consequences of his or her actions
situational ethics
when people make decisions based on a specific situation instead of universal laws
How does the economic indicator gross domestic product reflect economic health?
when the GDP goes up, the indication is that the economy is in a positive state
