Chapter 1: Exploring the World of Business and Economics

What economic systems are most countries in the world today categorized as?

Socialist or mixed

Equilibriam

(market price) when any product is the price at which the quantity demanded is exactly equal to the quantity supplied

Providing Employment

-Offering products requires the coordination of many people to manage manufacturing, sales, management, and a variety of other functions -provides variety of health benefits, retirement, funding, and other fringe benefits

Why do competitive factors matter?

-benefit you by providing new products and lower prices -heightened level of competition can drive weaker companies out of business, putting people out of work and eventually constricting your choice of products

Why do social factors matter?

-changes in the demographics of our population will influence what products companies offer and how they operate their business. -retirement creates new job opportunities for younger workers -workforce diversity requires employees and managers to adapt accordingly

Inflation

-economic statistic that tracks the increase in prices of goods and services over a period of time - a low, stable rate of around 2% is typically regarded as a sign of a stable economy

Why do Global Factors matter?

-increased globalization can make new products available and lower the cost of certain products -increases competition -global conflict can raise prices for goods like oil and can increase threats to national security

Why do technology factors matter?

-innovation leads to new products and can lower prices of existing ones -increased convenience of shopping for goods and services -easier to communicate

Unemployment rate

-percentage of a nations labor force unemployed at any time

Social Disruption

-when a company is successful, the increase in employment and customer activity can effect a community in unwanted ways (e.g. increase traffic, crowd schools, damage existing businesses, change community culture) -low pay and limited benefits effect employees - when a big business fails unemployment rates go up and bring hardship to community

Expansion

when an economy is growing

Contraction

when an economy is shrinking

Recession

when an economy shrinks two quarters in a row

Communism

where all property and profits are owned by state

Capitalism Economy

where individuals own and operate the majority of businesses, with very limited government intervention "invisible hand"

Summarize how studying business can help you choose a career

you can evaluate different industries, different sizes and types of employers, and possibilities for starting your own business.

Summarize how studying business helps you become a better-informed consumer and investor

your better able to evaluate purchase decisions and your better able to evaluate investment decisions.

Summarize how studying business can help improve your career

help improve your management skills and learn about business best practices that can make you more valuable to and organization

Peaks

high points in business cycle

Socialism Economy

key industries and resources are owned by the state. there is some private ownership of land and business

Troughs

low points in business cycle

Perfect competition

market situation where there are many buyers and sellers of a product and no single buyer or seller is powerful enough to effect the price of that product -KEY STRATEGIC CONSIDERATION- minimizing production costs in order to make a profit

Mixed Economy

most land and business is privately owned, but with various levels of government intervention

3 Concerns about the Impact of Business on Society

1. Health and Safety Risks 2. Environmental Damage 3. Social Disruption

What are the four benefits of studying Business?

1. Help you choose a career 2. It can improve your career 3. It can help you become a better-informed consumer and investor 4. It can help you become a more influential community member

5 Ways Companies offer Variety

1. Increasing quality 2.Increased choice 3. Increased Convenience 4. Increased Health and Safety 5. Increased value for money

3 ways businesses Improve Quality of life

1. Paying taxes 2. Charitable giving and community development 3. Contributing to economic growth

Four types of Business Competition

1. Perfect competition 2. Monopolistic competition 3. Oligopoly 4. Monopoly

2 Economic indicators that help us interpret the health of the economy

1. Unemployment rate 2. Inflation

What are 3 benefits of Business to society ?

1.Offering Valuable Products 2.Providing Employment 3.Improving Quality of life

4 types of economic systems

1.capitalism 2. mixed 3. socialist 4. communist

5 Factors of the business environment

Affect the success or failure of a business and the consumers as well. 1. Economic 2.Competitive 3.Global 4. Technology 5. Social

Environmental Damage

Any kind of production involves the consumption of natural resources which can sometimes cause irreversible damage to the land air and water. This can negatively impact the health of citizens in a community

Health and Safety Risks

Includes risks of working in production environment, the use of potentially unsafe manufacturing materials, and unsafe product design

Oligopoly

Market situation in which there are few sellers. (e.g. automobile, airline, car rental, cereal, and farm implement industries) KEY STRATEGIC CONSIDERATION- sellers in an oligopoly frequently match each others' pricing, then try and win their customers through product differentiation

Monopolistic Competition

Market situation in which there are many buyers along with a relatively large number of sellers KEY STRATEGIC CONSIDERATION- differentiate their product from competitors products

Monopoly

Market situation in which there is one seller and significant barriers to entry for competitors (pricing such as gas, water ,electricity utilities, are regulated by gov.) KEY STRATEGIC CONSIDERATION- massive investment is usually required to enter into this industry and success usually depends on quickly achieving a meaningful share of the market

Summarize how studying business helps you become a more influential community member

When you understand the potential impacts of a business, you can direct your purchasing power and your social influence toward businesses that align with your values

Why do Economic factors matter?

changes in the economic environment can impact your job opportunities, your potential income, and even the quality of life where you live.

Gross Domestic Product (GPD)

economic statistic the represents the total dollar value of all goods and services produced by all people within a country during a 1 year period

Law of Supply

states that as the price increases, the quantity supplied increases

Law of Demand

states that when the price decreases, the quantity demanded increases