business 101 exam 1

factors of production

Labor, capital, entrepreneur, physical resources, information resources

Capital

Describe the financial resources needed to operate a business

Entrepreneur

Person who accepts the risks and opportunities entailed in creating and operating a new business venture

Physical resources

Tangible things that organizations use to conduct their business and include natural resources and raw materials

Labor

Physical and intellectual contributions people make while engaged in economic production

Information resources

Data and other information used by businesses and include market forecasts specialized knowledge of people, and economic data

Privatization

Process of converting government enterprises into privately owned companies

Entrepreneur

Person who accepts the risks and opportunities entailed in creating and operating a new business venture

Major economic indicators

GDP, CPI, GNP

Gross Domestic Product (GDP)

Total of all goods and services produced within a given period by a national economy through domestic factors of production

Consumer Price Index (CPI)

Measures the average change over time in the prices paid by urban consumers for a market basket of goods and services, indicating inflation and deflation

Gross National Product (GNP)

Total value of all goods and services produced by a national economy within a given period regardless of where the factors of production are located

Productivity

Measures of economic growth that compares how much a system produces with the resources needed to produce it

Inflation

Occurs with widespread price increases occur throughout an economic system

Balance of trade

Economic value of all the products that a country exports minus the economic value of its imported products

Degrees of competition

Perfect competition, monopolistic competition, oligopoly, monopoly

Perfect competition

All firms in an industry must be large, number of firms in an industry must be large

Monopolistic competition

Market or industry characterized by numerous buyers and relatively numerous sellers trying to differentiate their products from those of competitors

Oligopoly

Market or industry characterized by a handful of (generally large) sellers with the power to influence the prices of their products

Monopoly

Market or industry in which there is only one producer that can therefore set the price of its products

Ethics

Beliefs about what is right and wrong or good and bad in actions that affect others

Business ethics

Refers to ethical or unethical behaviors by employee in the context of their jobs

Utility

Does a particular act optimize the benefits to those who are affected by it

Social responsibility

Refers to the overall way in which a business attempts for balance its commitments to relevant groups and individuals in its social environment

Small business

One that is independent (not part of a larger business) and that has relating little influence in its market

Sole proprietor

Business owned and usually by one person who is responsible for all of its debts

Partnership

Legal agreement between two or more people or entities who agree to co-own and operate a business, sharing responsibilities, profits, and losses

Limited partnership

Allows for limited partners who invest money but are liable only to the extent of their investments

General partnership

Business structure with two or more owners who share profits, losses, and liability for the business

Business plan

Documents in which the entrepreneur describes her or his business strategy for the new venture and demonstrates how it will be implemented

Corporation

Business that is legally considered an entity separate its owners and is liable for its own debts owners liabilities extends to the limits of their investments

Sole proprietorship

Advantages

• freedom

• Simple to form

• Low start-up costs

• Tax benefits

  Disadvantage

• Unlimited liability

• Limited resources

• Limited fundraising capability

• Lack of continuity

Partnership

Advantages

• more talent and money

• More fundraising capability

• Relatively easy to form

• Limited liability for limited partners

  Disadvantages

• Unlimited liability for general partners

• Disagreement among partners

• Lack of continuity

Corporation

Advantages

• limited liability

• Continuity

• Stronger fundraising capability

  Disadvantages

• Can be taken over against the wall of its management

• Double taxation for profits

• Complicated and expensive to form

Stockholders

Owner of shares of stock in a corporation