Key Concepts in Business and Economics

Business exam 2025

Need

something like air, food, or shelter that is necessary for survival

Want

something that people desire but that is not necessary for survival

Good

Tangible product that satisfies consumer needs.

Service

Intangible activity providing value to consumers.

Demand

Consumer willingness to purchase goods at various prices.

Supply

Quantity of goods available for sale in the market.

The Market

Place where buyers and sellers interact.

Copyright

Legal protection for original works of authorship.

Trademark

Symbol or name legally registered for exclusive use.

Entrepreneur

Individual who starts and manages a business.

Private Sector

Part of the economy owned by individuals or companies.

Public Sector

Part of the economy controlled by government entities.

Productivity

Measure of output per unit of input over time.

GDP

Total value of all goods and services produced in a country. Gross Domestic Product

Inflation

Rate at which general price levels rise over time.

Interest Rate

Cost of borrowing money expressed as a percentage.

Innovations example

New ideas or methods improving products or services. (AI math computing, crypto, 5G)

Demographics

Statistical data relating to population characteristics.

Accounting

System of recording and analyzing financial transactions.

Liquid

Asset easily converted to cash without loss.

Transaction

Exchange of goods, services, or funds between parties.

Advertising

Promotional activities to inform or persuade consumers.

Marketing

Process of promoting and selling products or services.

Standard of Living

Level of wealth, comfort, and material goods available.

Currency

money

Legal Tender

Currency recognized by law for settling debts.

International Trade

Exchange of goods and services across national borders.

Domestic Trade

Exchange of goods and services within a country.

Globalization

Process of increased interconnectedness among countries.

Law of Supply and Demand

If Demand for a product is high and the Supply of the product is low, the price will INCREASE. If Demand for a product is low and the Supply of the product is high, the price will DECREASE.

Law of demand

The consumers will increase the quantity of demand of a good/service as the price decreases.

Law of supply

Increasing Prices will result in Increase of supply.

factors of supply

change in the number of producers, increase in possible profit, change in technology, change in expectations, change in cost of production

factors of demand

income, change in expectation of future conditions, change in consumer taste, change in population

What are the components of Human Resources in Factors of Production?

Education/training and Health

What are examples of Natural Resources in Factors of Production?

Land, Water, Animals, Trees

What does Capital refer to in Factors of Production?

Startup Money

What role does Technology/Innovation play in Factors of Production?

Knowledge

Factors of production

Human resources, capital, technology, natural resources

co-branding

placing two or more brand names on a product or its package

Maslow's Triangle

Hierarchy of needs: physiological, safety, Belongingness, ego, self-actualization.

Physiological needs example

sleep, food, water

safety needs examples

shelther, investments, retirement

ego needs examples

credit cards, cars, liquor, furniture

self actualization needs examples

hobbies, travel, education

belongingness needs

clothes, drinks, clubs

consumer goods

personal use items (food,clothing).

industrial goods

purchased to produce more industrial goods (flour)

types of goods

industrial, consumer

ultimate consumer

A person who personally uses or consumes the product

industrial consumer

a business that buys goods and services for resale to use in the business

types of consumers

ultimate, industrial

components of the Law of supply and demand

supply curve, demand curve, equilibrum

3 main economic systems

traditional, market, command

Reasons why we buy stuff

income and price, status, current trends, habits, safety, promotion

3 reasons to start a business

achieve financial freedom, to use your creative skills and knowledge, be your own boss

forms of business ownership

sole proprietorship, partnership, corporation

Pros and Cons of Sole Proprietorship

Pro: easy startup, full control, little regulation

Con: wealth limits capital, must sell entire business, unlimited liability

Pros and Cons of Partnership

Pros: -Easy to start up and taxed as a personal income

Cons:

• Unlimited liability.

• Life limited to that of the owners.

• Equity limited to owners' combined wealth.

• Difficulty in transferring ownership

Pros and Cons of Corporation

Pros:

• Limited liability.

• Easy transfer of ownership.

• Equity is not limited.

cons:

-Difficult to start up

-Double taxation of earnings

parts of a business cycle

1. expansion 2. peak 3. recession 4. trough 5. Expansion

• Equity is not limited.

Cons:

-Difficult to start up

-Double taxation of earnings

Business Cycle

expansion, peak, contraction, trough.

Benefits of Work

Income, social interaction, skill development, personal fulfillment.

Business Success Measurement

Evaluated by profit, growth, customer satisfaction, market share.

Government Influence on Business

Regulations, taxation, subsidies affecting business operations.

Reasons for Business Failure

Poor management, insufficient capital, lack of market demand.

Benefits of Competition

Improves quality, lowers prices, fosters innovation in business.

7 P's of Marketing

Product, Price, Place, Promotion, People, Process, Physical evidence.

Importance of Accounting

Tracks financial health, ensures compliance, aids decision-making.

income statement parts

1. Revenue

2. Cost of goods sold

3. Gross profit

4. Operating expenses

5. Net income after taxes

balance sheet parts

1. Current Assets

2. Fixed Assets

3. Intangible Assets

4. Current Liabilities

5. Long-term liabilities

6. Owner's equity