Chapter 1

Question 1

Business

Answer 1

an organization that strives for a profit by providing goods & services desired by its customers

Question 2

Goods

Answer 2

Tangible Items

Question 3

Services

Answer 3

Intangible items that cannot be held, touched, or stores

Question 4

Standard of Living

Answer 4

the output of goods & services that people can buy

Question 5

Quality of Life

Answer 5

general level of human happiness based on life expectancy, educational standards, health, sanitation, & leisure time

Question 6

Risk

Answer 6

potential to lose time & money or not be able to accomplish an organization’s goals

Question 7

Revenue

Answer 7

money received by providing services or selling goods

Question 8

Profit

Answer 8

money left over after covering costs

Question 9

Loss

Answer 9

when costs are higher than revenue

Question 10

Factors of Production

Answer 10

natural resources, labor (human resources), capital, and entrepreneurship, Knowledge

Question 11

Natural Resources

Answer 11

commodities that are useful inputs in their natural state

Question 12

Labor (human resources)

Answer 12

economic contributions of people working with their mind & muscle

Question 13

Capital

Answer 13

tools, machinery, equipment, & buildings used to produce goods & services and get them to consumers

Question 14

Entrepreneur

Answer 14

people who combine the inputs of natural resources, labor, and capital to produce goods & services with the intention of making a profit or accomplishing a not-for-profit goal

Question 15

Knowledge

Answer 15

combined talents and skills of the workforce; primary driver of economic goal

Question 16

External Business Environment

Answer 16

sectors that create a unique set of challenges and opportunities for business; ex: technological, economic, global, political/legal, demographic, social, & competitive

Question 17

Demographic

Answer 17

the study of people’s vital statistics: age, gender, race & ethnicity, & location

Question 18

Economic Systems

Answer 18

combination of policies, laws, & choices made by its government establishing systems that determines what services and goods are produced and where they are allocated

Question 19

Economics

Answer 19

the study of how a society uses scarce resources to produce & distribute goods and services

Question 20

Macroeconomics

Answer 20

the study of the economy as a whole

Question 21

Microeconomics

Answer 21

focuses on individual parts of the economy - household/firms

Question 22

Macroeconomic goals

Answer 22

• economic growth
• full employment
• price stability

Question 23

Economic Growth

Answer 23

an increase in a nation’s output of goods and services

Question 24

Gross Domestic Product (GDP)

Answer 24

the total market value of all final goods & services produced within a nation’s borders each year

Question 25

Business Cycles

Answer 25

upwards and downward changes

Question 26

Recession

Answer 26

a decline in GDP that lasts for 2 consecutive quarters (3 months)

Question 27

Full Employment

Answer 27

having jobs for people who want to and can work

Question 28

Unemployment Rate

Answer 28

indicates the % of the total labor force not working but is actively looking for work

Question 29

Frictional Unemployment

Answer 29

short term unemployment that is not related to the business cycle

Question 30

Structural Unemployment

Answer 30

unrelated to the business cycle but is involuntary

Question 31

Cyclical Unemployment

Answer 31

occurs when a downturn in the business cycle reduces the demand for labor throughout the economy

Question 32

Seasonal Unemployment

Answer 32

occurs during specific times of the year in certain industries

Question 33

Inflation

Answer 33

the average of all prices of foods & services is rising

Question 34

Purchasing Power

Answer 34

the value of what money can buy; function of inflation & income

Question 35

Demand-Pull Inflation

Answer 35

when the demand for goods & services is greater than the supply

Question 36

Cost-Push Inflation

Answer 36

increases in production costs, which then push up the prices of final goods & services

Question 37

Consumer Price Index (CPI)

Answer 37

an index of the prices of a "market basket" of goods & services purchased by typical urban consumers

Question 38

Producer Price Index (PPI)

Answer 38

measures the price paid by producers and wholesalers for various commodities

Question 39

Monetary Policy

Answer 39

a government's programs for controlling the amount of money circulating in the economy & interest rates

Question 40

Federal Reserve Systems (Feds)

Answer 40

central banking system, prints money & controls how much of it will be in circulation

Question 41

Federal Funds Rate

Answer 41

the interest rate charged on overnight loans between banks

Question 42

Contractionary Policy

Answer 42

the Fed restricts, or tightens, the money supply by selling government securities or raising interest rates; used to reduce inflation

Question 43

Expansionary Policy

Answer 43

the Fed increases, or loosens, growth in the money supply; increases inflation

Question 44

Fiscal Policy

Answer 44

taxation and spending

Question 45

Federal Budget Deficit

Answer 45

when the government spends more than it collects in taxes

Question 46

Federal Budget Surplus

Answer 46

revenue exceeds spending

Question 47

National Debt

Answer 47

accumulated total of past deficits

Question 48

Demand

Answer 48

the quantity of a good/service that people are willing to buy at various prices

Question 49

Demand Curve

Answer 49

a graph showing the relationship between price & demand; slopes downward and to the right

Question 50

Supply

Answer 50

the quantity of a good/service that businesses will make available at various prices

Question 51

Supply Curve

Answer 51

relationship between various prices and the quantities a business will supply; slopes upwards and to the right

Question 52

Market Structures

Answer 52

Pure Monopoly, Oligopoly, Monopolistic Competition, Perfect Competition

Question 53

Barriers to Entry

Answer 53

factors that prevent a new firm from competing equally with existing firms

Question 54

Collusion (illegal)

Answer 54

firms coordinating their pricing and output decisions

Question 55

Antitrust Cases

Answer 55

legal challenges arising out of laws designed to control anti-competitive behavior

Question 56

Relationship Management

Answer 56

involves building, maintaining, & enhancing interactions with customers and other parties to develop long-term satisfaction through mutually beneficial partnerships

Question 57

Supply Chain Management

Answer 57

building strong bonds with suppliers

Question 58

Relationship Marketing

Answer 58

building strong bonds with customers