Key Concepts in Business and Economics

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Business exam 2025

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93 Terms

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Need

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

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Want

something that people desire but that is not necessary for survival

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Good

Tangible product that satisfies consumer needs.

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Service

Intangible activity providing value to consumers.

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Demand

Consumer willingness to purchase goods at various prices.

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Supply

Quantity of goods available for sale in the market.

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The Market

Place where buyers and sellers interact.

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Copyright

Legal protection for original works of authorship.

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Trademark

Symbol or name legally registered for exclusive use.

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Entrepreneur

Individual who starts and manages a business.

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Private Sector

Part of the economy owned by individuals or companies.

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Public Sector

Part of the economy controlled by government entities.

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Productivity

Measure of output per unit of input over time.

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GDP

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

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Inflation

Rate at which general price levels rise over time.

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Interest Rate

Cost of borrowing money expressed as a percentage.

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Innovations example

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

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Demographics

Statistical data relating to population characteristics.

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Accounting

System of recording and analyzing financial transactions.

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Liquid

Asset easily converted to cash without loss.

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Transaction

Exchange of goods, services, or funds between parties.

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Advertising

Promotional activities to inform or persuade consumers.

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Marketing

Process of promoting and selling products or services.

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Standard of Living

Level of wealth, comfort, and material goods available.

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Currency

money

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Legal Tender

Currency recognized by law for settling debts.

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International Trade

Exchange of goods and services across national borders.

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Domestic Trade

Exchange of goods and services within a country.

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Globalization

Process of increased interconnectedness among countries.

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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.

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Law of demand

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

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Law of supply

Increasing Prices will result in Increase of supply.

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factors of supply

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

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factors of demand

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

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

Education/training and Health

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What are examples of Natural Resources in Factors of Production?

Land, Water, Animals, Trees

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What does Capital refer to in Factors of Production?

Startup Money

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

Knowledge

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Factors of production

Human resources, capital, technology, natural resources

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co-branding

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

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Maslow's Triangle

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

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Physiological needs example

sleep, food, water

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safety needs examples

shelther, investments, retirement

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ego needs examples

credit cards, cars, liquor, furniture

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self actualization needs examples

hobbies, travel, education

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belongingness needs

clothes, drinks, clubs

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consumer goods

personal use items (food,clothing).

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industrial goods

purchased to produce more industrial goods (flour)

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types of goods

industrial, consumer

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ultimate consumer

A person who personally uses or consumes the product

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industrial consumer

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

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types of consumers

ultimate, industrial

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components of the Law of supply and demand

supply curve, demand curve, equilibrum

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3 main economic systems

traditional, market, command

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Reasons why we buy stuff

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

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3 reasons to start a business

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

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forms of business ownership

sole proprietorship, partnership, corporation

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Pros and Cons of Sole Proprietorship

Pro: easy startup, full control, little regulation

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

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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

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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

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parts of a business cycle

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

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  • Equity is not limited.

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Cons:

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-Difficult to start up

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-Double taxation of earnings

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Business Cycle

expansion, peak, contraction, trough.

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Benefits of Work

Income, social interaction, skill development, personal fulfillment.

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Business Success Measurement

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

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Government Influence on Business

Regulations, taxation, subsidies affecting business operations.

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Reasons for Business Failure

Poor management, insufficient capital, lack of market demand.

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Benefits of Competition

Improves quality, lowers prices, fosters innovation in business.

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7 P's of Marketing

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

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Importance of Accounting

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

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income statement parts

  1. Revenue

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  1. Cost of goods sold

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  1. Gross profit

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  1. Operating expenses

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  1. Net income after taxes

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balance sheet parts

  1. Current Assets

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  1. Fixed Assets

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  1. Intangible Assets

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  1. Current Liabilities

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  1. Long-term liabilities

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  1. Owner's equity