BUAD 101 Exam #1 Review Questions

What is a not-for-profit organizations primary objective?

to not return profits to owners

What activity lies at the heart of every business endeavor?

an exchange between a buyer and a seller

What do profits represent?

rewards earned by business people who take risks to create want-satisfying goods and services

What accounting equation must every organization solve?

revenue - expense = profit

What are the four basic factors of production?

natural resources, capital, human resources, and entrepreneurship

What is a natural resources corresponding factor payment?

rent

What is capitals corresponding factor payment?

interest

What is human resources corresponding factor payment?

wages

What is entrepreneurship's corresponding factor payment?

profit

What are the four types of captial?

technology, tools, information, and physical facilities

What is an entrepreneur?

someone who takes a risk in starting a business to earn a profit

What is the private enterprise system?

an economic system that rewards firms for their ability to identify and serve the needs and demands for customers

What is an alternative term for the private enterprise system?

capitalism

What is the most basic freedom under the private enterprise system?

private property

What is private property?

the right to own, use, buy, sell, and bequeath land, buildings, machinery etc.

What does the private enterprise system guarantee business owners?

the right to all profits - after taxes - they earn through their activities

What is freedom of choice in a private enterprise system?

the potential for citizens to choose their own employment, purchases, and investments

What are the six eras of business history?

colonial, industrial revolution, industrial entrepreneurs, production, marketing, relationship

What is transaction management?

building and promoting products in the hope that enough customers will but them to cover costs and earn profits

During which era of business history was branding developed?

the marketing era

Why was the industrial revolution era important in business?

introduction of mass production by semi-skilled workers and machines

What is the definition of outsourcing?

using outside vendors to produce goods or fulfill services that were handled in-house or in-country

What is the definition of offshoring?

relocation of business processes to lower-cost locations overseas

What is the definition of nearshoring?

outsourcing production or services to locations near a firms home base

What is the definition of onshoring?

returning production to its original manufacturing location because of changes in costs or processes

What are business ethics?

the standards of conduct and moral values involving decisions made in the work environment

What is social responsibility?

a management philosophy that includes contributing resources to the community, preserving the natural environment, and developing nonprofit programs for the benefit of the general public

What is customer orientation?

focuses first on determining unmet consumer wants and needs and then designs products to satisfy those needs

What is the definition of business ethics?

the standards of conduct and moral values governing actions and decisions in the work environment

What is conflict of interest?

business decision may be influenced for personal gain or to harm another

What are Lawrence Kohlberg's stages of ethical standards?

pre-conventional, conventional, and post-conventional

What is the pre-conventional stage?

individuals consider their own needs and desires and rules are followed out of fear

What is the conventional stage?

individuals consider the interests of others and outside group influences

What is the post-conventional stage?

the highest level of ethical and moral behavior where individual follows personal principles

What does CSR stand for? What is it?

Corporate Social Responsibility. Contributions to the overall economy

What are stakeholders?

customers, investors, employees, and public affected by or with an interest in a company

What is a code of conduct?

a formal statement that defines how an organization expects employees to resolve ethical questions

What is whistle-blowing?

an employee's disclosure to company officials, government authorities, or the media of illegal, immoral, or unethical practices

What is economics?

the social science that analyzes the choices individuals, groups, and governments make in allocating scarce resources

What is microeconomics?

the study of small economic units, such as individual consumers, families, and businesses

What is macroeconomics?

the study of a nation's overall economic issues, how resources are used, and how government policies affect standard of living

What is the definition of demand?

willingness and ability of buyers to purchase goods and services at different prices

What is the definition of supply?

the amount of goods and services for sale at different prices

What is demand driven by?

the number of factors that influence how people decide to spend their money, outside circumstances, or large economic events

What is a demand curve?

a graph of the amount of a product that buyers will purchase at different prices

What do lower prices attract?

larger purchases

What is a supply curve?

a graph that shows the relationship between different prices and the quantities that sellers will offer for sale, regardless of demand

What is the equilibrium price?

supply and demand curves meet, prevailing market price at which you can buy an item

What is pure competition?

a market structure where large numbers of buyers and sellers exchange homogeneous products that no single participant can significantly influence price

What is monopolistic competition?

a market structure where large numbers of buyers and sellers exchange heterogeneous products so participant has some control over price

What is an oligopoly?

a market situation where relatively few sellers compete and high start-up costs serve as barriers to new competitors (think industries)

What is a monopoly?

a market situation in which a single seller dominates trade of a good or service for which buyers can find no close substitutes (think government regulated)

What is a planned economy?

government controls determine business ownership, profit, and resource allocation

What is socialism?

government ownership and operation of major industries such as communications

What is communism?

property would be shared equally under direction of a strong central government (classless)

What is a mixed market economy?

economic system that mixes both private enterprise and planned economy

What is recession?

cyclical economic contratction that lasts for longer than six months

What is a depression?

prolonged recession that causes significant drop in gross domestic product (GDP)

What is GDP?

gross domestic product or the sum of all goods and services produced within a countries boundaries

What is inflation?

rising prices caused by excessive consumer demand and increases in cost of production or material

What is core inflation rate?

inflation rate after energy and food prices are removed

What is hyperinflation?

economic situation characterized by soaring prices

What is deflation?

prices continue to fall and weaken economy

What is CPI?

Consumer Price Index or the monthly average change in prices of goods and services

What are the four unemployment types?

frictional (between jobs), structural (displacement), cyclical (downturn in business cycle), seasonal (pattern of work)

What does productivity describe?

the relationship between the number of units produced and the number of human inputs necessary to produce them