Bus 100 - Exam 1

What is a business

an organization that provides goods and services to earn a profit

What are the major ways to finance a business

• personal savings

• family/friends

• credit cards

• loans

• crowdfunding

• angel investors

• venture capital

General Partnership Disadvantages

• Differences and Disagreements

• Unlimited Liability

• Lack of Continuity

• Withdraw

what is equilibrium price?

price where quantity supplied equals quantity demanded

what are the major opportunities for small businesses?

• market niches

• personal customer service

• lower overhead costs

• technology

what happens when demand increases

price increases

what does strong U.S. dollar mean?

the dollar buys more foreign currency

whats a partnership?

business owned by 2 or more people

whats the focus of the relationship era?

• building long-term relationships with customers

whats a sole proprietorship?

business owned by 1 person

what is a trade surplus

exports exceed imports

what happens when supply decreases?

price increases

what is a loss?

when expenses exceed revenue

what is GDP?

the total value of all final goods and services produced within a nation’s borders

who benefits from a strong U.S. dollar?

• U.S. travelers abroad

• American firms operating overseas

• Foreign exporters selling to Americans

General Partnership Advantages

• pool finances

• shared responsibility

• complimentary skills

• tax advantages

what are the sole proprietorship advantages?

• easy to form

• complete control (retention of control)

• retention of profit

• tax advantage

what era of business are we in now?

relationship era

what is inflation?

rising average prices

what is a Monopoly

a market with 1 dominant producer

what is economics

the study of choices people, business, and governments make in allocating scarce resources (distributing societies limited resources)

what are the 4 factors of production?

• natural resources

• capital

• human resources

• entrepreneurship

what are the 4 rights of capatalism?

1. right to own a business and keep profits

2. right to private property

3. right to free choice

4. right to fair competition

what are the 3 tools of monetary policy?

open market

discount rate

reserve requirement

what are the 5 eras of business history?

INDUSTRIAL revolution

ENTREPRENUERSHIP era

PRODUCTION era

MARKETING era

RELATIONSHIP era

what are the 5 measures of economic performance?

• GDP

• employment level

• business cycle

• price levels

• productivity

what is macroeconomics?

the study of economics as a whole

Corporation disadvantages

• double taxation

• more paperwork and regulation

• complex to form

• conflict of interest

LLC Disadvantages

• more complex formation

• annual franchise tax

• different in state laws

• some limits on business types

why do nations trade globally?

• access to factors of production

• reduced risk

• inflow of innovation

what are the 5 parts of the business cycle?

peak

recession

trough

recovery

expansion

what is monetary policy?

Fed. reserve actions that influence interest rates and money supply

what are the tools of fiscal policy?

• taxation

• gov. spending

what is balance of trade?

difference between exports and imports

what is capitalism?

an economic system based on private ownership, economic freedom, and fair competition

what is supply?

quantity producers are willing to sell at different prices

whats an exchange rate?

value of one nations currency relative to another

whats a franchise?

a business arrangement allowing use of another companies brand and system

what are the top 2 federal revenue sources

• individual income taxes

• social security taxes

what is fiscal policy?

gov. efforts to influence the economy through taxes and spending

whats a quota?

limit on imports

what is embargo?

complete ban on trade

what are the 4 market development options from greatest to least risk

1 - direct investment

2 - franchising

3 - Licensing

4 - importing/exporting

Corporation Advantages

• limited liability

• permanence

• ease of transfer of ownership

• easier to raise money

• specialized management

what are the 5 business environments?

• economic

• competitive

• technological

• social

• global

what happens when supply increases?

price decreases

what is demand?

quantity consumers are willing to buy at different prices

whats a LLC

business structure with limited liability and flexible taxation

LLC Advantages

• limited liability

• tax pass through

• flexible management

• flexible ownership

what is comparative advantage?

producing a product at a lower opportunity cost than another country

whats a corporation?

sep. legal entity owned by SHAREHOLDERS/STOCKHOLDERS

what are the entrepreneurial competencies

• vision

• self-reliance

• energy

• confidence

• tolerance of uncertainty

• tolerance of failure

Sole Proprietorship Disadvantages

• full liability

• limited financial resources

• heavy workload

• 100% of debt

what is a tariff?

tax on imports

what is microeconomics?

study of individuals, family, or businesses

whats profit?

revenue minus expenses

what are 3 major trade barriers?

• sociological differences

• economic differences

• political/legal differences

what happens when demand decreases?

price decreases

what are the major threats of a small business?

• high risk of failure

• lack of knowledge

• too little money

• regulatory burden

• high health insurance costs

what are the top 2 fed. expenses?

• social security

• net interest of the debt