Economics, Business Structures, and Global Trade: Key Concepts and Ethics

command economy

An economy where the government decides what to produce and who gets it.

capitalism (free market)

A system with private property, freedom of choice, and competition.

mixed economy

Combination of government involvement and market forces.

communism

Government makes nearly all economic decisions.

Adam Smith

Economist who believed self-interest creates goods, services, and jobs.

efficiency

Producing with the least amount of resources.

demand curve

As price decreases, demand increases.

benefit of competition

Better quality and lower prices.

free trade

Movement of goods/services without barriers.

exchange rate

Value of one currency compared to another.

NAFTA/USMCA

U.S., Canada, and Mexico.

protective tariff

Tax on imports to protect domestic jobs.

import quota

Limit on imports (not a total ban).

strategic alliance

Partnership between firms to build advantages.

contract manufacturing

Hiring a foreign company to make products; lowers risk.

$1 billion in exports

Generates about 7,000 U.S. jobs.

insider trading

Using private company info to profit in the stock market.

compliance-based ethics codes

Rules that rely on external laws/regulations.

integrity-based ethics codes

Focus on shared accountability and 'doing right.'

corporate philanthropy

Donations of money/resources.

corporate social initiative

CSR tied to company expertise (ex: TOMS 'One for One').

corporate responsibility

Actions like sustainability and eco-friendly practices.

social audit

Review of a company's CSR efforts.

watchdogs

Groups monitoring companies' social responsibility.

biggest global trade ethics issue

Labor standards.

sole proprietorship

Business owned by one person; profits taxed once.

disadvantage of a sole proprietorship

Unlimited liability and limited resources.

partnership

Business owned by two or more; share profits/liability.

advantage of partnerships

Pooling resources.

corporation

Legal entity owned by stockholders, run by managers/board.

double taxation

Corporate profits taxed, then dividends taxed again.

S corporation

Avoids double taxation, but restrictions apply.

closed corporation

Stock not available to the public.

cooperative (co-op)

Member-owned organization; members vote on leadership.

franchise

Rights sold to operate under a company's name/product.

horizontal merger

Two competitors combine (e.g., grocery stores).

acquisition

One company buys another.