BUSA Chapter 1
Finance
planning for, obtaining, and managing a company's funds *important b/c new business owners usually need to borrow money to get started
Equilibrium Price
price at which buyers are willing to buy exactly the amount that sellers are willing to sell
Privatization
process of converting gov-owned to private ownerships
Mixed Market Economy
relies on both markets and gov to allocate resources
Factors of Production
resources consisting of land, labor, capital, and entrepreneurial skills combines to produce goods and service
Inflation
rise in the overall price level *deflation: decrease in overall price level
Monopolistic Competition
sellers supply differentiated products (products that differ but serve similar purpose)
Demand Curve
shows the quantity of a product that will be bought at certain prices
Supply Curve
shows the quantity of a product that will be offered at certain prices
Economics
study of how scarce resources are used to produce outputs (goods and services) that are distributed among people
Marketing
the activity for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large
National Debt
total amount of money owed by fed gov
Capitalism
an econ system in which businesses are owned/operated by individuals *competition dictates how goods and services will be allocated
Natural Monopolies
b/c of the industry's importance to society, one seller is permitted to supply products w/o competition
Full Employment
condition under which about 95% of those who want to work are employed
Price Stability
conditions under which the prices for products remain fairly constant
Perfect Competition
consumers buy standardized products form numerous small business
Leading Economic Indicators
data that predict the status of the economy three to twelve months in the future *new unemployment claims *Avg weekly manufacturing hours *Building permits
Profit
difference b/t the revenue that a company brings in from selling goods and services and the costs of generating this revenue
Recession
economic slowdown measured by decline in GDP
not-for-profit organizations
established to provide social or educational services *receive funding from private foundations, individuals, and gov
Oligopoly
few sellers supply a large portion of all the products sold in the marketplace (airlines)
Accountants
financial advisor responsible for measuring, summarizing, and communicating financial and managerial information *financial: prepare financial statements *managerial: prepare info such as reports on the cost of materials used in production process (internal)
Pure Socialism
industries that provide essential services, such as utilities, banking, and health care, are often gov owned
Mangement
involves planning for, organizing, staffing, directing, and controlling a company's resources so that it can achieve its goals *plan by setting goals and develop strategies to achieve them *organize activities and resources to ensure company goals are met *staff organization with employees *direct employees to accomplish goals *design controls for assessing the success of plans/decisions and take action when needed
Depression
long-lasting recession
Functional Areas of Business
management, operations, marketing, accounting, finance
Economic System
means by which a society makes decisions about allocating resources to produce and distribute products
GDP
measure of market value of all goods and service produced by a nation's economy in a given year *goes up=growing ; down=contracting
Consumer Confidence Index
measure of optimism that consumers express about the economy as they go about their everyday lives
Consumer Price Index
measures inflation by measuring the prices of goods purchased by typical consumer
Legal Monopoly
one seller supplies a product or technology to which it holds a patent
Monopoly
only one seller supplying products at regulated prices
Unemployment Rate
percentage of total labor force that's currently unemployed and actively seeking work *goes up during recession b/c companies are reluctant to hire when demand is low
Operations manager
person who designs and oversees the process that converts resources into goods/services *responsible for ensuring products are of high quality
3 things to measure econ goals
GDP Unemployment Rate Price Stability
Fiscal Policy
Governmental use of taxation and spending to influence economic conditions
Economic Goals
Growth High Employment Price Stability
Resources
Inputs used to produce outputs *Land *Labor *Capital (buildings and equipment) *Entrepreneurship *Outputs=goods and services
Major Participants of Business
Owners, Consumers, and Employees
Business Cycle
Pattern of expansion and contraction in an economy
for-profit social enterprise
A business that, beyond the profit motive, has a social mission built into its business model. *making world a better place is part of what they do *in between profit and non profit *Ex: TOMS
Communism
A political system featuring the highest level of gov control over allocation and distribution
profit-making business
Activity that provides goods or services to consumers for the purpose of making a profit.
External Force on Business
Economy Gov Consumer Trends Pressure to be good corporate citizen
Monetary Policy
Efforts exerted by the Fed to regulate nation's money supply
Demand
Quantity of a product that buyers are willing to purchase at various prices *products more attractive at lower price cause we buy more b/c income goes further
Supply
Quantity of a product that sellers are willing to sell at various prices *business more willing to sell product when price rise and less when price falls b/c they are set up to make profit
Economic Indicator
Statistic that provides info about trends in the economy
Lagging Economic Indicators
Statistical data that measure economic trends after the overall economy has changed *average length of unemployment