MCE test #1

demography

The scientific study of population characteristics ex: race, gender, income, etc

franchisor

a company that develops a product concepts and sells others the rights to make and sell the products

monopolistic competition

large # of sellers produce similar products that buyers perceive as different can change product with no contingency

cons of free market

leads to inequality: business managers/owners typically make more than employees does not respond to needs of poor, elderly, disabled, etc greed overlooked environment

Corporation

legal entity separate & distinct from owners (highest percentage of total receipts)

Partnerhship

legal form of business with 2 or more owners

pros of LLC

limited liability Choice of taxation Flexible ownership rules Flexible distribution of profit/losses Operating flexibility Can choose how taxed but not double taxed

perfect competition

many sellers but none large enough to dictate price of product & no differentiation

Free Market Capitalism

market controls decisions on production mostly private owned & operated for profit

structural unemployment

mismatch between skills and jobs available responds by programs

double taxation

must file and pay taxes on corporate level and individual level

what happens as a result of population shift

new opportunities/threats are created

limits of S corporation

no more than 100 shareholders must be US citizen or permanent resident

nonprofit source capital

tax deductible charitable contributions from individuals/foundations/corporations/grants

conglomerate merger

the joining of firms in completely unrelated industries

vertical merger

the joining of two companies involved in different stages of related business

brain drain

the loss of the best and brightest people to other countries

stakeholders

the people whose interests are affected by an organization's activities

equilibrium point

the point at which QS=QD

Economics

the study of how society manages its scarce resources

cost of goods sold

the total cost of merchandise sold during the period

what is the goal of a business

to provide goods/services while maxing profit

revenue

total amount business takes in by selling goods/services

seasonal unemployment

unemployment caused by seasonal changes in the demand for certain kinds of labor

cons of partnership

unlimited liability division of profits disagreements among partners difficulty of termination

Cons of Sole Proprietorship (7)

unlimited liability limited resources management difficulties time commitment limited growth limited lifespan few fringe benefits

frictional unemployment

voluntary choice not to work

loss

when a business's expenses are more than its revenues (rev. -expenses = negative)

Globalization

world trade growth as result of technological innovation

Accounting accounts for

Daily expenses, sales, and profits Inventory control, customer records, and payroll

Pros of Communism

all resources distributed equally and protects vulnerable members of society (in theory)

mixed economy

an economic system combining private and public enterprise (some government control some market)

operating costs

cost involved with operating the organization

personal price index (PPI)

cost of things sold to producers to make for personal consumption (b2b market)

limitation of C Corporation

double taxation

profit

earns more than spends (TR minus TC)

what must you do to be an entrepreneur

employ others, earn $ for themselves, pay taxes & high standard of living

who runs smaller businesses in socialism

entrepreneurs

unemployment rate

% of civilians at least 16 years or older who are unemployed and tried to find a job within prior 4 weeks

how many people worldwide does a CO-OP serve and how

1 billion world wide Democratically controlled (vote) by members who elect board of directors that hires direct management

recession

2 or more consecutive quarters of decline in GDP

inflation

A general and progressive increase in prices (want some just not too high)

GO (gross output)

A measure of total sales volume at all stages of production

franchisee

A person who buys a franchise

C Corporation

A state-chartered legal entity with authority to act and have liability separate from its owners unlimited owners

what do all organizations need

Capital Good ideas Planning Budgeting Information management Accounting Marketing Good employee relations Overall material know-how

2 types of price indexes

Consumer Price Index (CPI) Producer price index (PPI)

demand

Consumer willingness and ability to buy products

Human resources jobs

Deciding labor needs Recruiting and selecting the right people Training and development growth Regards and culture for retention Motivation for performance

Pros of Sole Proprietorship (5)

Easy start/end your own boss legacy no special taxes retention of profits

Types of Gross Domestic Product

GDP & GO

cons of corporation

Initial cost Extensive paperwork Double taxation Two tax returns Size Difficult for termination Possible conflict w shareholders/board of directors

Supply chain considerations

Inventory and inventory control methods Location of plants & distributors Transportation costs

cons of franchise

Large start-up cost Shared profits Management regulations Coattail effects Restrictions on selling Fraudulent franchisers

Limited Liability Company (LLC)

Like S Corp. w/o special liability requirements owner(s) can be person, partnership, or corporation Pay self-employed tax Owners not personally liable Pay personal/ corporation taxes LLC ownership is nontransferable (no stock)

Pros of Corporation

Limited liability Ability to raise $ for investment Size perpetual life Ease of ownership change Ease of attracting talented employees Separation of ownership from management Reduce risk./biases

pros of franchise

Management and marketing assistance Personal ownership Nationally recognized name Financial advice/assistance Lower failure rate

planning an organization involves

Mission, vision, and value Strategic & financial objections

pros of partnership

More financial resources Shared management/skills/knowledge Longer survival No special taxes

Stagflation

Prices rise but other economic indicators say economy is going bad (very problematic)

Who declares a recession?

National Bureau of Economic Research

cons of LLC

No stock ownership is nontransferable Fewer incentives Taxes Paperwork

Manufacturing plan accounts for

Plant size Machinery required Production capacity

Macroeconomics

The study of the economy as a whole

Gross Domestic Product (GDP)

The sum total of the value of all the goods and services produced in a nation

Small Business Administration (SBA)

US government agency that advises and assists small businesses by providing management, financial advice, and loans

S corporation

Unique government creation that looks like a corporation but is taxed like sole proprietors and partnerships

recovery

When economy stabilized and starts to grow leads to economic boom

deflation

a decrease in the general level of prices (bad)

Entrepenuer

a person/team who risks his money to begin a business

disinflation

a reduction in the rate of inflation (price rise is slowing down)

pure risk

a risk that presents the chance of loss but no opportunity for gain ex: fire

Benefits of S Corporation

avoids double taxation Flow through entity not taxed on corporate level

socialism

basic businesses should be owned by government so profits can be evenly distributed citizens highly taxed

Microeconomics

behavior of people and organizations in particular markets

economic boom

business is booming

cooperative (co-op)

business owned and operated by those who use it Producers, consumers, or workers w similar needs who pool their resources mutual gain

franchise agreement

business sells the rights to use the business name and sell a product or service to others in a given territory

free market falls under which type of competition

capitalism

risk

chance of loss, degree of probability of loss, amount of possible loss

horozontal merger

combination of firms producing the same kind of product (Same industry)

how are profits distributed in a business

distributed/reinvested back to the owners/shareholders

crowdfunding

donation based or debt-investment (peer-to-peer lending)

cons of socialism

few incentives for risk brain drain less innovation slower job growth

Oligopoly

few sellers dominate market sellers set price and control supply/demand

limited liability

financial responsibility of business owners only for what they invested in a business

4 types of unemployment

frictional, structural, cyclical, seasonal

price indexes

gauges health of economy by measuring levels of disinflation, inflation, deflation, and stagflation

globalization most important issues

global competition international economic conditions negotiation of trade agreements among nations

communism

government takes almost all economic decisions and almost all factors of production ex: north korea

what is the role of board of directors in a corporation

hires and fires top officers set salary for officers hire to max business profit

resource development

how to increase resources and create conditions to better use resources ex: solar panels

flow-through entity

income is passed straight to its shareholders or owners

venture capitalists

individuals or companies that invest in new business in exchange for partial ownership of those businesses

what is the role of an owner in a corporation

influence by electing board of directors

acquisition

one company's purchase of the property/obligations of another company

limited partnership

one or more general partners and one or more limited partners

monopoly

one seller controls total supply of product/service and sets price

pros of a free market

open competition, provides opportunities for the poor to work way out of poverty, increased motivation to produce

productivity

output per unit of input measure of effectiveness for new tech/machinery/equipment

Sole Proprietorship

owned by 1 person owner manages all aspects most common/highest percentage form of business

corporations must have what 3 things

owners, officers, and board of directors

limited partner

partner that invests money but does NOT have liability beyond investment

General Partnership

partners share equally in both responsibility and liability

Consumer price index (CPI)

people buying for personal consumption (cost)

Consumer Market

people with unsatisfied wants and needs who have both the resources and willingness to buy

to finance your business you need

potential sources of capital: lenders (banks) SBA angels crowdfunding venture capitalists

Angels

private individuals who invest their own money in potentially hot new companies before they go public

what is a businesses source capital

private investors

2 types of organizations

profit and non-profit

What are 3 main components of an organization

purpose/goal, multiple people, structure

supply

quantity owners are willing to provide at different prices

how are profits distributed in non-profits

reinvested back into organization

speculative risk

result in either profit or loss, ex: buying new machinery

merger

result of 2 firms joining to 1

Cyclinal unemployment

result of business cycle low amount of available jobs

Franchise

right to use a specific business name and sell its products/services in any given territory

rights under free market capitalism

right to: own property own business & own all profits freedom of competition freedom of choice

what is the role of officers in a corporation

select managers/employees with help of HR

what is a non-profits goal

serve need to society

depression

severe recession usually accompanied by deflation

Cons of Communism

shortages (prices dont reflect demand) economic depression risk of abuse of power

Pros of Socialism

social equity free education free healthcare free childcare, longer vacations short work week generous sick leave

command economy falls under which type of competition

socialism and communism