Business Test 1

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SeanHatfield
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284003
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Business Test 1
Updated:
2014-09-24 16:08:55
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Business Entrepreneurship
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Intro to Business
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Intro to Business Test 1
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  1. is the statistical study of the human population in regard to its size, density, and other characteristics, such as age, race, gender, and income.
    Demography
  2. the amount of goods and services people can buy with the money they have.
    Standard of living
  3. the general well-being of a society in terms of political freedom, a clean natural environment, education, health care, free time, and everything else that leads to satisfaction and joy.
    Quality of life
  4. Factors of production—
    Which two are the most predictive?  
    What did Peter Drucker say?
    the resources used to create wealth:

    • -LAND (or “natural resources”.)
    • -LABOR (workers.)
    • -CAPITAL (e.g., machines, tools, and buildings; but not money—money is used to buy factors of production.)
    • -ENTREPRENEURSHIP.
    • -KNOWLEDGE.

    Peter Drucker believes the most telling factor is knowledge.
  5. all the people who stand to gain or lose by the policies and activities of a business.
    Stakeholder
  6. Business environment—

    know the elements
    the surrounding factors that either help or hinder the development of business.

    • –Economic and legal environment.
    • –Technological environment.
    • –Competitive environment.
    • –Social environment.
    • –Global business environment.
  7. Baby boomers—

    who, how many, impact, dates
    born between 1946 and 1964—about 80 million
  8. Service economy v. manufacturing economy—
    where are the jobs.
    Since the mid-1980s, the SERVICE SECTOR HAS GENERATED ALMOST ALL OF OUR ECONOMY’S INCREASES IN EMPLOYMENT.
  9. The loss of the best and brightest people to other countries
    Brain drain
  10. a situation in which prices are actually declining, occurring when countries produce so many goods that people cannot afford to buy them all.
    Deflation
  11. a general rise in the prices of goods and services over time.
    inflation
  12. a situation in which price increases are slowing (the inflation rate is declining.)
    Disinflation
  13. two or more consecutive quarters of decline in the GDP.
    Recession
  14. a severe recession, usually accompanied by deflation
    Depression
  15. the study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals.
    economics
  16. part of economic study that looks at the behavior of people and organizations in particular markets.
    Microeconomics
  17. part of economic study that looks at the operation of a nation’s economy as a whole.
    Macroeconomics
  18. What does the Fed do?
    The FEDERAL RESERVE SYSTEM (THE FED) lends money to the federal government when it spends more than it collects.
  19. What are the 3 types of economic systems—

    benefits and disadvantages
    Capitalism- an economic system in which all or most of the means of production and distribution are privately owned and operated for profit

    Socialism- an economic system based on the premise that some, if not most, basic businesses should be owned by the government so that profits can be distributed among the people.

    Communism- an economic and political system in which the state (the government) makes almost all economic decisions and owns almost all the major factors of production
  20. economic systems in which the government largely decides what goods and services will be produced, who will get them, and how the economy will grow.
    Command Economies
  21. the market largely determines what goods and services get produced, who gets them, and how the economy grows.
    Free Market Economies
  22. What are the four rights under capitalism?
    -The right to PRIVATE PROPERTY.

    -The right to OWN A BUSINESS and to keep all of that business’s profits after taxes.

    -The right to FREEDOM OF COMPETITION.

    -The right to freedom of choice.
  23. What do we know about Adam Smith?
    What was the title of his 1776 book?
    • -ADAM SMITH advocated creating wealth through entrepreneurship. 
    • -Smith believed that FREEDOM was vital to the survival of any economy.
    • -Also, he believed that people will work hard if they have INCENTIVES for doing so.
    • -Smith is considered by some to be the FATHER OF MODERN ECONOMICS.

    THE WEALTH OF NATIONS
  24. What are the four forms of competition?
    PERFECT COMPETITION- the market situation in which when there are many sellers in the market and no seller is large enough to dictate the price of a product.

    MONOPOLISTIC COMPETITION- exists when a large number of sellers produce products that are very similar but are perceived by buyers as different.

    OLIGOPOLY- is a form of competition in which just a few sellers dominate a market.

    MONOPOLY- occurs when there is only one seller for a product or service.
  25. What is supply and demand?  
    What is a supply curve?...a demand curve?
    What happens with supply when price increases?  
    What happens with demand when price decreases?
    • SUPPLY- the quantity of products that manufacturers or owners are willing to sell at different prices at a specific time.
    • DEMAND- the quantity of products that people are willing to buy at different prices at a specific time.

    • The quantity producers are willing to SUPPLY at certain prices are illustrated on a SUPPLY CURVE.
    • The quantity consumers are willing to buy at certain prices are illustrated on a DEMAND CURVE.

    • The amount supplied will increase as the price increases.
    • The quantity demanded will decrease as the price increases.
  26. What is the equilibrium point?
    THE SUPPLY AND DEMAND CURVES CROSS, and the quantity demanded equals the quantity supplied.
  27. the monthly statistic that measures the pace of inflation or deflation.
    CONSUMER PRICE INDEX (CPI)
  28. the total value of goods and services produced in a country in a given year.
    GROSS DOMESTIC PRODUCT (GDP)
  29. National debt—
    latest estimate and what is it?
    • the sum of government deficits over time.
    • The national deficit is the amount of money that the federal government spends over and above the amount it gathers in taxes.

    $17,756,459,259,854
  30. Unemployment rate—what is it and what is the national rate?
    the number of civilians at least 16 years old who are unemployed and tried to find a job within the prior four weeks.

    6.1%
  31. Who is the Federal Reserve chair now?
    Janet Yellen
  32. How much is the minimum wage now?
    7.25
  33. buying products from another country.

    selling products to another country.
    Importing-

    Exporting-
  34. the practice of selling products in a foreign country at lower prices than those charged in the producing country.
    Dumping
  35. Tariff—protective and revenue
    a tax on imports, making imported goods more expensive.

    PROTECTIVE TARIFFS- are import taxes designed to raise the price of imported products so that domestic products can be more competitively priced.

    REVENUE TARIFFS- are designed to raise money for the government.
  36. a complete ban on the import or export of a certain product or stopping all trade with a particular country.
    Embargo
  37. What has been the impact of the Internet regarding Global marketing?
    help companies bypass normal distribution channels to reach a large market.
  38. What is the outlook for Global marketing?
    • No nation can produce all the products that its people need.
    • Nations demand trade with countries to meet the needs of their people.
  39. NAFTA—what countries and what does the acronym stand for?
    NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA) is the agreement that created a free-trade area among the United States, Canada, and Mexico 
  40. a country should sell to other countries those products that it produces most effectively and efficiently and should buy from other countries those products that it cannot produce as effectively or efficiently.
    Comparative advantage
  41. when a country has a monopoly on producing a specific product or is able to produce it more efficiently than all other countries.
    Absolute Advantage
  42. the difference between money coming into a country (from exports) and money leaving the country (for imports) plus money flows from other factors such as tourism, foreign aid, military expenditures, and foreign investment.
    Balance of payments
  43. a nation’s ratio of exports to imports.
    Balance of Trade
  44. Euro
    In January 2001 the separate currencies of the EU nations were transformed into A SINGLE MONETARY UNIT: THE EURO.
  45. a global strategy in which a firm allows a foreign company to produce its products in exchange for a fee.
    Licensing
  46. buying of permanent property and businesses in foreign nations.
    Direct Investment
  47. How many countries in EU?
    47, 50, 56, 59?
  48. an attitude that our culture is superior to all others.
    Ethnocentricity
  49. Physical/environmental forces—how can these affect your business decisions?
    • -Technological constraints may make it difficult to build a large global market.
    • -Some developing nations have such PRIMITIVE TRANSPORTATION AND STORAGE SYSTEMS that international distribution is ineffective.
    • -Certain TECHNOLOGICAL DIFFERENCES affect exportable products (such as the difference between 110 and 220 voltage).
  50. the use of government regulations to limit the import of goods and services.
    Trade protectionism
  51. a limit on the number of products in certain categories that a nation can import.
    Import Quota
  52. trading merchandise for merchandise with no money involved.

    a complex form of bartering in which several nations may be involved, each trading goods for goods or services for services.
    • Bartering
    • Countertrading
  53. FCPA of 1978-or 1977—What is it?
    What are the two exceptions?
    FOREIGN CORRUPT PRACTICES ACT OF 1978 prohibits questionable or dubious payments to foreign officials to secure business contracts.

    Gatekeepers and Gratuity?
  54. Forms of Ownership:

    OWNED AND USUALLY MANAGED BY ONE PERSON

    Advantages:
    -EASE OF START UP AND ENDING
    -BEING YOUR OWN BOSSPRIDE OF OWNERSHIP
    -RETENTION OF PROFITNO SPECIAL TAXES

    Disadvantages:
    -UNLIMITED LIABILTY
    -LIMITED FINANCIAL RESOUCES
    -DIFFICULTY IN MANAGEMENT
    -OVERWHELMING TIME COMMITMENT
    -FEW FRINGE BENEFITS
    -LIMITED GROWTH
    -LIMITED LIFE SPAN
    Sole proprietorship
  55. Forms of Ownership

    LEGAL FORM OF BUSINESS WITH TWO OR MORE OWNERS

    ALL OWNERS SHARE IN OPERATING AND ASSUMING LIABILITY

    ONE OR MORE GENERAL PARTNERS AND ONE OR MORE LIMITED PARTNERS
    • Partnerships
    • General
    • Limited
  56. Forms of Ownership:

    RESPONSIBILITY FOR LOSSES ONLY UP TO THE AMOUNT INVESTED

    Advantages: -MORE FINANCIAL RESOURCES
    -SHARED MANAGEMENT AND POOLED KNOWLEDGE
    -LONGER SURVIVAL

    Disadvantages:
    -UNLIMITED LIABILITY
    -DIVISION OF PROFITS
    -DISAGREEMENTS AMONG PARTNERS
    -DIFFICULT TO TERMINATE
    Limited Liability
  57. Forms of Ownership:

    -LOOKS LIKE A CORPORATION BUT IS TAXED LIKE A PARTNERSHIP
    -TRADED ON THE STOCK EXCHANGES LIKE A CORPORATION
    -MAINLY LIMITED TO GAS AND OIL BUSINESS NOW.
    MASTER LIMITED PARTNERSHIP (MLP)
  58. Forms of Ownership:

    LIMITS PARTNERS’ RISK OF LOSING THEIR PERSONAL ASSETS TO ONLY THEIR OWN ACTS AND OMISSIONS AND TO THE ACTS AND OMISSIONS OF PEOPLE UNDER THEIR SUPERVISION.
    LIMITED LIABILITY PARTNERSHIP (LLP)
  59. Forms of Ownership:

    -LEGAL ENTITY WITH AUTHORITY TO ACT AND HAVE LIABILITY SEPARATE FROM ITS OWNERS
    -C OR CONVENTIONAL--STATE-CHARTERED LEGAL ENTITY WITH AUTHORITY TO ACT AND HAVE LIABILITY SEPARATE FROM ITS OWNERS

    Advantages: 
    -MORE MONEY FOR INVESTMENT
    -LIMITED LIABILITY
    -SIZE
    -PERPETUAL LIFE
    -EASE OF OWNERSHIP CHANGE
    -DRAWING TALENTED EMPLOYEES
    -SEPARATION OF OWNERSHIP FROM MANAGEMENT

    Disadvantages:
    -INITIAL COST
    -PAPERWORK
    -TWO TAX RETURNS
    -SIZE
    -DIFFICULTY OF TERMINATION
    -DOUBLE TAXATION
    -POSSIBLE CONFLICT WITH BOARD OF DIRECTORS
    Corporations
  60. Forms of Ownership:

    Types of corporations:
    • -ALIEN
    • -DOMESTIC
    • -FOREIGN
    • -CLOSED OR PRIVATE
    • -OPEN OR PUBLIC
    • -PROFESSIONAL
    • -NONPROFIT
    • -MULTINATIONAL (MNC)
  61. Forms of Ownership:

    A UNIQUE GOVERNMENT CREATION THAT LOOKS LIKE A CORPORATION BUT IS TAXED LIKE SOLE PROP. AND PARTNERSHIPS
    S Corporation
  62. Forms of Ownership:

    -SIMILAR TO S CORP. BUT WITHOUT THE SPECIAL ELIGIBILITY REQUIREMENTS
    -NEWEST FORM
    -FAST GROWING
    -MAY DECIDE HOW TO BE TAXED
    LIMITED LIABILITY COMPANY (LLC)
  63. Acquiring companies at different levels of production

    Acquiring companies at the same level of production

    Combination of corporations operating different businesses under same large corporation
    • Vertical integration
    • Horizontal Integration
    • Conglomerate
  64. Owner buys an established company to manage.
    • Owner= franchisee
    • Business= Franchise
  65. Forms of Ownership:

    -OWNED AND CONTROLLED BY THE PEOPLE WHO USE IT
    -HAVE SIMILAR NEEDS
    -POOL THEIR RESOURCES
    -FOR MUTUAL GAIN
    Cooperative
  66. a legal document which is presented to prospective buyers of franchises in the pre-sale disclosure process
    Uniform Franchise Disclosure Document (UFDD)

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