BUSINESS_EXAM_1-_Study_Guide | CHAPTERS 1- 3 | KEY Points Clearly Marked

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Business Exam 1 Chp 1-Business is an entity that offers products to their customers to earn profit. Profit is earned when expenses are greater than revenue. Expenses exceed revenue the company has a... loss of profit. A good -physical product | A service is an intangible product. Factors of production- labor,natural resources, capital, entrepreneurial talent, intell. property & technology | labor-the physical work | natural R-raw materials provided | capital (real capital), which refers to the physical facilities used to produce goods and services. (Financial) money used to facilitate a business. Entre. Talent-a human resource, though at risk, can effectively manage a business | Technology-computers,phones,etc(social networking) | intect. property- ownership of patents, copyrights, and trademarks. Businesses| local-one of a kind, serves surrounded area | regional- serves a wider area, ( not international or national | National- within one country(not international) | multinational- serves multiple countries Undercapitalization-lack of access a business owner has to adequate funds for the business. offshoring- is the process of relocating production facilities abroad or subcontracting at least some of the components of products to foreign companies around the world. Chp 2 Economics-It is the study of how individuals and businesses make decisions to best satisfy wants, needs, and desires with limited resources. Macroeconomics- study of the behavior economy as a WHOLE | Microeconomic-study of how individual businesses, households, and consumers make decisions to allocate their limited resources in the exchange of goods and services. Market eco- ran by individuals | planned- ran by government | mixed - blend of both economies Supply-availability of an item | Demand- need or want for an item Ketchup and fries( complementary goods)-when more of one is sold, more of the other is sold. The fed is unable to increase and decrease rates in the economy, and unable to set the federal funds rate. Perfect comp- virtually identical products | monopolistic-similar, but NOT identical products | monopoly - one company dominates entire industry | duopoly - only 2 suppliers | oligopoly- only a few sellers exist | inflation- rise in general prices overtime ^ Unemployment- Frictional- temporary | Structural-permanent unemploy. | Cyclical-firms have to cut back | seasonal- workers laid off during off-season Business cycle - Peak-economy is at its highest | Recession-decline in GDP for 2 or more successive quarters of a year | Trough-recession hits bottom & economy begins to expand again Recovery-economy begins to grow again Discount rate- Gov->bank Federal funds rate - bank->bank Reserve requirement-minimum amount of money banks must hold in reserve for depositors who want to withdraw it Fiscal policy- The use of increased taxes to affect the economy Chp3- Ethics-study of general nature of morals & specific moral principles that govern a person’s behavior | Moral relativism-no universal truth; only individ. beliefs,perspectives, & values Situational ethics-ppl make decisions based on specific situations | mission state.-core purpose of an organization | Corporate social responsibility(CPR)-company’s obligation to conduct its activities with aim of achieving social environmental & economic development | Socially responsible investing(SRI)- refers to purchasing shares only in companies that meet certain standards of corporate social responsibility. | Sustainability-the process of working to improve quality of life in ways that simultaneously protect and enhance the earth's life support system. | Corporate philanthropy-practice of donating some of their profits & resources to charitable organizations Chp 4Globalization- movement towards a more interconnected & interdependent world economy Outsourcing-assignment of certain task such as production or accounting, to an outside company Free trade barriers: Tariffs-taxes( a change in tax to sell your goods | Subsidies-local gov. Pays local producers to make the product | Quota-having a limit of how much they can take of their products. | Embargo-total BAN of trade America has an embargo on Cuba Exchange rate-rate at which currencies are converted into another currency Deficits & Surpluses- Trade Def. -value of import exceeds value of export Trade Surplus-value of export exceeds value of import Increase in globalization-lower trade barriers, technology innovations Licensing- agreement in which a firm’s intangible property may be sold or made available to another firm for a fee | Franchising-selling a well-known brand name or business method in exchange for a fee & percentage of profit | Joint venture-arrangement whereby two or more firms join together to create a new business entity that is legally separate from its parents ( shared ownership) | Exporting- refers to the process of entering foreign markets by selling domestically produced in other countries Wholly owned subsidiary-formed when an investing firm purchases or establishes a foreign or domestic facility An appreciation of domestic currency makes products for foreigners more expensive | a depreciation makes imported goods more costly for domestic consumers Ethnocentrism- a belief that one’s culture is superior to all other cultures. 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