Fundamentals of Business

Products

Products

Goods or services provided by a business

Goods

Tangible products made to be sold

Services

Intangible products that have a monetary value the act of doing work for someone

Needs

Goods and services required for survival eg. food, water, heat, shelter, clothes

Wants

They are goods and or services that enhances a person’s life eg. tv, cell phone, transportation

Fad

A short term craze that becomes popular and unpopular quickly

Trend

A general direction that society moves in lasts consistently for a long time, typically solves a problem in society

Marketplace

Where the buying and selling of products takes place, composed of producers and consumers

Manufacturer

Makes the good

Supplier

Provides the good or service

Supply

The quantity of goods/services that producers and sellers are willing to provide/sell to consumers

Demand

Refers to the quantity of goods/services that the market is willing to buy

Equilibrium

The number of people that want to buy at that price ='s the number of people that want to sell at that price

Substitute Goods

A good that can easily be replaced by another similarly purposed good eg. sugar and sweetener

Complementary Goods

A good that is used with another good eg. toothpaste, and toothbrush

Producer

Businesses that make goods or provide services

Consumers

People who use products

Business Interdependence

When one business relies on another to help with their own business

Obsolete Products

Products that consumers no longer want or need

Producer Goods

Goods that businesses buy from other businesses to aide in the making of the product or the providing of the service

What is the most important thing a business has to do to be successful

Fill a need or want while making a profit or providing a service to the community

What does interdependence in business mean? Be able to give examples

When one business relies on another to help with their own business eg. Mcdonalds being reliant on a paper mill/cardboard company to make their big mac boxes

How will the consumer benefit if there is a lot of competition

A consumer will benefit if there is a lot of competition because it gives them purchasing power, because competition creates varying prices and service quality, giving the consumer more choice is what standard of service or good they'll accept and how much they will pay for it

Explain how manufacturers and suppliers can also be consumers

Because they are buying materials in order to make or provide something

What is the Law of Supply

All other factors being equal, as the price of a good or service increases the quantity of goods or services offered by suppliers increases and vice versa

What is the Law of Demand

All other factors being equal as the price of a good or service increases, consumer demand for the good or service will decreases and vice versa

What 5 factors affect the supply of a product

Change in number of producers, changes in technology, changing production costs, changing future expectations, change in environment

How is supply affected by change in the number of producers

When a product is proving highly profitable other business will want to make similar products, so in turn supply of that product will increase, cause prices to decrease because of competition (if demand stays the same)

How is supply affected by changes in technology

Changes in technology can reduce the production cost by encouraging more business to start producing, increasing supply eg. use of robotics reduces labor costs

How is supply affected by change in production costs

Changing costs involved in production or provision can increase or decrease supply, for example is production becomes expensive supply decreases it if becomes cheaper supply will increase to make more profit

How is supply affected by change in future expectations

Producers always plan ahead to forecast sales, production, financing, economic conditions, and demand

How is supply affected by change in the environment

Seasons, Weather conditions, Natural disasters

What 5 factors affect the demand of a product

Change in price, change in consumer income, change in consumer taste/preference, changing future expectations, changes in population

How is demand affected by change in price

The lower the price of goods and services the more people purchase. Price may not matter in a urgent scenario

How is demand affected by change in consumer income

As income increases people tend to buy more, demand goes up (in some situations though the opposite is true like in the case of groceries, where demand would go down as eating out is more affordable)

How is demand affected by change in consumer taste/preference

Consumer taste over time can cause increase in demand for more fashionable items, and a decrease in demand for unfashionable items

How is demand affected by change in future expectations

If consumers expect the price of an item will increase in the future they will often purchase more in anticipation.

How is demand affected by change in population

Certain segments of the population increasing can cause an increase in demand for goods and services associated with that segment eg. seniors and retirement homes.

What are the 5 stages of the business cycle

Prosperity, Inflation, Recession, Depression, Recovery

Prosperity

• People making lots of $

• Business making products lots of research and development

• Consumers buying lots of stuff and its expensive

• Employment is high, consumers are feeling very secure

Inflation

• Because demand for product is exceed production, prices are going to increase

• Producers increase price to meet demand

• Less $ on luxurious items, because they are too expensive

• Incomes hasn’t increased but prices have

• Employment is still steady/can't afford to give raises

• Business sales are still strong, profits have decreased

• Government increases interest rate

• Government slows down government spending

Recession

• Employment rate is low. Since profits have gone down companies begin to lay off employees

• They become more smart shoppers, purchasing second hand products, and lower level or products or may just wait to make purchases because they are less financially secure

• Government reduces interest rates, and increase spending, to create jobs

Depression

• Because of government intervention we often skip this stage

• Employment is at lowest no hiring

• Businesses profits have seen a drastic drop in profit, and some can’t survive, and close down

• Strictly bare essentials

Recovery

• Prices are low

• Things producers/consumer have started to breakdown and need replacing

• Consumers are still feeling financial insecurity but are still buying second hand, lower level products and some may not be buying at all

• Businesses start slowly getting back to normal