Ch. 1 The U.S. Business Enviroment
Technological Environment
includes the ways a company creates value through human knowledge, work methods, physical equipment, electronics and telecommunications, and processing systems.
natural monopoly
industry in which one company can most efficiently supply all needed goods or services
China economy
is a communist country, they now function as a mixed-market economy instead of a pure-communist-based economy. Is increasingly allowing private ownership and entrepreneurship, with government oversight.
Communism
is a system in which the government owns and operates all factors of production, owns all businesses, and controls business decisions such as what to make, how much to charge, etc.
planned economy
is one in which a centralized government controls most factors of production. Ex. socialism and communism
The equilibrium price or market price
is the point where the amount of goods demanded and the amount of product supplied are the same.
economic system
is the system a country uses to allocate its resources among its citizens.
The factor of production that includes the physical and intellectual contributions people make while engaged in economic production is known as _____
labor
According to the ________, producers offer more product for sale as prices rise and less as prices fall
law of supply
privatization
process of converting gov enterprises into privately owned companies
law of supply
producers are willing to offer more product as prices increase and will offer less product as prices fall
Economic Environment
relevant conditions that exist in the economic system in which a company operates. During the recent recession, many people were looking for jobs and companies were able to hire employees for a lower wage. This is an example of how the ________ environment can affect business
Political-Legal Enviroment
represents the relationship between business and government, usually in the form of government regulation.
Labor
sometimes called human resources or human capital, includes the physical and intellectual contributions of people who are engaged in economic production.
The pattern of expansions and contractions in a nation's economic system is referred to as _____
the business cycle
Balance of Trade
the difference between a country's total exports and total imports
Profits
the excesses of money earned from sales over the expenses of the business. The prospect of earning profits encourages entrepreneurs to invest time and money to open and expand businesses. difference between a business's revenues and its expenses
business cycle
the pattern of short-term ups and downs (expansions and contractions) in an economy
aggregate output
the total quantity of goods and services produced by an economic system within a specific period of time.
gross domestic product (GDP)
the total value of all goods and services produced within a given period by a national economy through domestic factors of production
perfect competition
to exist there must be many smaller companies in the market with similar products so that no one company is powerful enough to influence product prices.
Purchasing Power Parity
a measure of how many units of currency are needed in one country to buy the amount of goods and services that one unit of currency will buy in another country
recession
a period during which aggregate output declines (2 quarters)
The ________ is the total quantity of goods and services produced by an economic system within a specific period of time.
aggregate output
market economy
allows for free enterprise, so production and price are mostly determined by supply and demand.
One of the benefits of a healthy business environment is
an increased standard of living
Oligopoly
A market structure in which a few large firms dominate a market
Private enterprise system
An economic system in which individuals and groups, rather than the government, own or control the means of production
economic growth
If GDP (gross domestic product) is rising, then aggregate output is going up
John owns a restaurant and business is so good that he is thinking about enlarging his building so he can accommodate more customers. John is operating in a ________ economy.
Market
The U.S. economy is BEST classified as a _______.
Mixed market economy- Even though the United States strives to be as free and open as possible, certain activities are restricted by government laws, rules and regulations.
What is the BEST example of a perfectly competitive market?
Soybeans
Gross National Product (GNP)
The total value of all goods and services produced by a country's economy in a given year. It includes all goods and services produced by corporations and individuals of a country, whether or not they are located within the country.
oligopoly
generally only a few large suppliers or sellers of a product or service. The entry of new competitors is difficult because large capital investment is needed.
equilibrium price
When demand and supply curves are plotted on the same graph, the point at which they intersect is the market price, which is the point at which the quantity of goods demanded and the quantity of goods supplied are equal
Shortage
When the price of goods drops below the market equilibrium point, consumers will demand more goods than suppliers are willing to produce. there are not enough resources available to produce goods demanded
The economic system in which the government owns and operates all factors of production and makes all business decisions is known as ___
communism
Sociocultural Environment
consists of the values and customs of the society where the company operates, and the ethical standards that the company adopts.
Perfect competition
depends on a large number of small firms all producing identical products. 1.
mixed market economy
economic system featuring characteristics of both planned and market economies
External Environment
everything inside an organizations boundaries that might effect it. Including the national/international economy, technology, government & legal, nature, demographic and social structure
monopoly
exists when consumers have only one company from which they can get a specific product.
consumer price index
measures the prices of products typically purchased by consumers, and is used to measure inflation.
Monopolistic competition
occurs when many companies are attempting to make their product seem different from that of their competitors. Differentiating strategies include brand names, design or styling, and advertising. Competition forces businesses to make products better or cheaper.
Socialism and communism are examples of a ____
planned economy