Business Practice Chapter 1

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Define Free Enterprise

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Define Free Enterprise

The system of business in which individuals are free todecide what to produce, how to produce it, and what price to sell it.

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What does Joe Dudley sell and who is he?

He is one of the worlds most respected black business owners. He sells hair care snd cosmetic products

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What two main questions can impact your carrer

What can I do that will make employers want to pay me a salary? What skills do I have that employers need?

(baby em, I think you could say something with your paintings! because your really good!!!

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Cultural diversity

differences among people in a workforce owing to race, ethnicity, and gender

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What are some serious problems facing Americans

  1. National Debt

  2. High unemployment rate

  3. Volatile Stock Market

  4. Consumer Pessimism

  5. Unstable Economy & Business Environment

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What are 5 ways to Improve your productivity

  1. Focus on one task at a time

  2. Make your workload more manageable

  3. Organize your work space and your work day

  4. Structure your time

  5. Give your brain a break

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When a firms expenses are greater than its sales revenue the firm has a ______

Negative cash flow

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______ is the process of developing and promoting the difference between ones produces and other similair products

product differentation

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Increased competition from firms in other nations is an example of the

lobal Environment

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the ability to think in abstract terms while invisioning the biggere picture falls in the category of _____ deemed importan managment trait

conseptual skills

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relationship between sales and profits can be written as

sales revenue - expenses = profits

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productivity can be described as

Average level of output per work per hour

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barter

a system of exchange in which goods or services are traded directly for other goods or services without using money

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business

the organized effort of individuals to produce and sell, for a profit, the goods and services that satisfy society's needs

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business cycle

the recurrence of periods of growth and recession in a nation's economic activity

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capitalism

an economic system in which individuals own and operate the majority of businesses that provide goods and services

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command economy

an economic system in which the government decides what goods and services will be produced, how they will be produced, for whom available goods and services will be produced, and who owns and controls the major factors of production

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competition

rivalry among businesses for sales to potential customers

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consumer price index (CPI)

a monthly index that measures the changes in prices of a fixed basket of goods purchased by a typical consumer in an urban area

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consumer products

goods and services purchased by individuals for personal consumption

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cultural (or workplace) diversity

differences among people in a workforce owing to race, ethnicity, and gender

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deflation

a general decrease in the level of prices

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demand

the quantity of a product that buyers are willing to purchase at each of various prices

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depression

a severe recession that lasts longer than a typical recession and has a larger decline in business activity when compared to a recession

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domestic system

a method of manufacturing in which an entrepreneur distributes raw materials to various homes, where families process them into finished goods to be offered for sale by the merchant entrepreneur

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economics

the study of how wealth is created and distributed

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economy

the way in which people deal with the creation and distribution of wealth

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entrepreneur

a person who risks time, effort, and money to start and operate a business

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factors of production

resources used to produce goods and services

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factory system

a system of manufacturing in which all the materials, machinery, and workers required to manufacture a product are assembled in one place

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federal deficit

a shortfall created when the federal government spends more in a fiscal year than it receives

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fiscal policy

government influence on the amount of savings and expenditures; accomplished by altering the tax structure and by changing the levels of government spending

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free enterprise

the system of business in which individuals are free to decide what to produce, how to produce it, and at what price to sell it

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gross domestic product (GDP)

the total dollar value of all goods and services produced by all people within the boundaries of a country during a one-year period

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inflation

a general rise in the level of prices

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Invisible hand

a term created by Adam Smith to describe how an individual's personal gain benefits others and a nation's economy

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macroeconomics

the study of the national economy and the global economy

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market economy

an economic system in which businesses and individuals decide what to produce and buy, and the market determines quantities sold and prices

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market price

the price at which the quantity demanded is exactly equal to the quantity supplied

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microeconomics

the study of the decisions made by individuals and businesses

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mixed economy

an economy that exhibits elements of both capitalism and socialism

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monetary policies

Federal Reserve's decisions that determine the size of the supply of money in the nation and the level of interest rates

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monopolistic competition

a market situation in which there are many buyers along with a relatively large number of sellers who differentiate their products from the products of competitors

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monopoly

a market (or industry) with only one seller, and there are barriers to keep other firms from entering the industry

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national debt

the total of all federal deficits

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oligopoly

a market (or industry) in which there are few sellers

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perfect (or pure) competition

the market situation in which there are many buyers and sellers of a product, and no single buyer or seller is powerful enough to affect the price of that product

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producer price index (PPI)

an index that measures prices that producers receive for their finished goods

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product differentiation

The process of developing and promoting differences between one's products and all competitive products

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productivity

the average level of output per worker per hour

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profit

what remains after all business expenses have been deducted from sales revenue

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recession

two or more consecutive three-month periods of decline in a country's GDP

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service economy

an economy in which more effort is devoted to the production of services than to the production of goods

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social media

the online interaction that allows people and businesses to communicate and share ideas, personal information, and information about products or services

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specialization

The separation of a manufacturing process into distinct tasks and the assignment of the different tasks to different individuals

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stakeholders

all the different people or groups of people who are affected by an organization's policies, decisions, and activities

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standard of living

a loose, subjective measure of how well off an individual or a society is, mainly in terms of want satisfaction through goods and services

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supply

the quantity of a product that producers are willing to sell at each of various prices

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sustainability

creating and maintaining the conditions under which humans and nature can exist in productive harmony while fulfilling the social, economic, and other requirements of present and future generations

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unemployment rate

the percentage of a nation's labor force unemployed at any time

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Free enterprise

Individuals are free to decide what to produce, how to produce it, and at what price to sell it

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What Is Business?

The organized effort of individuals to produce and sell, for a profit, the goods and services that satisfy society's needs

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What four things does business need?

Human Resources, Material Resources, Informational Resources, Financial Resources

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What is manufacturing business?

Goods Producing, Keyboards, world wide

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What is service business?

Service Providing, health care, regional

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Marketing intermediaries

Buy products from manufacturers and resell

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The Relationship Between Sales Revenue and Profit

Profit is what remains after all business expenses have been deducted from sales revenue. A loss (negative profit) results when a firm's expenses are greater than its revenues.

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Stakeholders

Stakeholders are all the different people or groups of people who are affected by the policies and decisions made by an organization.

Stakeholders include consumers, marketing intermediaries, stockholders, and employees.

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Economics

Economics is the study of how wealth (anything of value) is created and distributed.

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Microeconomics

The study of the decisions made by individuals and businesses

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Macroeconomics

The study of the national and global economies

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Economy

The system through which a society creates and distributes wealth

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Capitalism

Individuals: Own and operate the majority of businesses that provide goods and services. Privately own resources. Decide what to buy. The market drives supply and price. Role of government is limited.

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mixed economy

Businesses: Produce goods and services to exchange for revenues (money). Use revenues to purchase factors of production. Households: Consume goods and services. Own resources of some factors of production. Government: Provides public services in exchange for taxes.

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Command Economy: Socialism

Government: Decides what will be produced, how it will be produced, and who owns and controls the factors of production. Owns and controls key industries. Workers may choose their own occupations. Goal is to equally distribute income, eliminate poverty, provide social services, and eliminate economic waste. Small-scale private businesses may be permitted.

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Command Economy: Communism

Government: Owns and controls all factors of production. Plans production to meet the needs of the state. Dictates occupations, wages, and prices. The goal is to create a classless society where all contribute according to their ability and receive benefits according to their needs. No private businesses are allowed.

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Productivity:

The average level of output per worker per hour

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Gross Domestic Product (GDP):

The total value of all goods and services produced by all people within the boundaries of a country during a one-year period

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Consumer Price Index CPI

A monthly index that measures the changes in prices of a fixed basket of goods purchased by a typical consumer in an urban area

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Producer Price Index PPI

An index that measures prices that producers receive for their finished goods

Differs from CPI due to: Government subsidies Sales and excise taxes Distribution costs

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Balance of Trade

The total value of a nation's exports minus the total value of its imports over a specific period of time

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Inflation

The value of a dollar goes down. Demand rises.

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Inflation Rate

An economic statistic that tracks the increase in prices of goods and services over a period of time; usually calculated on a monthly or annual basis

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Unemployment Rate

The percentage of a nation's labor force unemployed from January 2002

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Corporate Profits

The total amount of profits made by corporations over selected time periods

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Discount Rate

The interest rate the Fed offers to member banks who need to borrow money to keep their reserves at or above the minimum.

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Prime Rate

The lowest interest rate that banks charge their most credit-worthy customers. Also the basis for many home loan programs. Always adjusts based on the discount rate.

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Federal Funds Rate

Interest rate banks charge one another for the use of Federal funds. The Fed indirectly controls this rate by the way it buys and sells Treasuries to the banks.

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Monetary Policies

Monetary Policies are Federal Reserve decisions that determine the size of the supply of money in the nation and the level of interest rates.

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Federal Deficit

The Federal Deficit is a shortfall created when the federal government spends more in a fiscal year than it receives.

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National Debt

The National Debt is the total amount the federal government owes.

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Competition

Competition is rivalry among businesses for sales to potential customers. In a capitalistic society, competition ensures only businesses that provide consumers with useful products and services at fair prices will survive.

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Conditions for Perfect Competition

A single product is involved. There are no restrictions on firms entering the industry. All sellers offer basically the same product. All buyers and sellers know everything there is to know about the market. The overall market is not affected by the actions of any one buyer or seller. The going price is set by forces of supply and demand.

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Conditions of Monopolistic Competition

There are many buyers and a large number of sellers. Products are similar in nature and intended to satisfy the same need. Sellers try to gain a competitive edge through product differentiation - unique features, attention-getting brand name, unique packaging, special services.

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Conditions of Oligopoly

There are few, large sellers. Considerable investment is required to enter market. Market actions of each seller have a considerable effect on competitors' sales and prices.

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Conditions of Monopoly

One seller and no close substitute for the product or service sold Barriers to keep others from entering the market Seller must set its price based on the demand

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Legal (Limited) Monopoly

Software

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Natural Monopoly

Public Utilities

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Barter System

Goods and services are directly exchanged.

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Domestic System

Entrepreneur distributes raw materials to homes.

Families process materials into a finished good.

Entrepreneur sells finished goods.

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