Sport Finance Chapter 5 Flashcards
(34 cards)
What is Economics?
Study of how people choose to allocate their scarce resources
Economics examines the choices made given limited resources and various demands.
What influences choices in Economics?
Demand, Scarcity, Surplus, Price
These factors help determine how resources are allocated and the decisions made by consumers and producers.
Define Demand in the context of Economics.
Quantity of a desired product/service
Demand reflects consumer willingness to purchase at various price levels.
What is Scarcity?
What happens when can’t meet demand
Scarcity forces individuals and organizations to make choices about resource allocation.
What is a Surplus?
Exceeds demand
A surplus occurs when the quantity supplied is greater than the quantity demanded.
What does Price represent in Economics?
What the buyer must give to obtain what is offered by the seller
Price is a crucial factor in determining market transactions.
Give an example of scarcity in a professional setting.
A professional league does not expand into every metropolitan area that could potentially support a team
This illustrates how organizations must make strategic choices about expansion.
What is MicroEconomics?
Study of issues that occur at firm level (supply, demand, pricing)
Microeconomics focuses on individual markets and the behavior of consumers and firms.
What is MacroEconomics?
Study of forces that affect numerous sectors overall economy at the community, national, regional, or global level (income, unemployment, inflation)
MacroEconomics looks at the economy as a whole rather than individual markets.
Define Accounting Profit.
Revenues exceed costs and expenses over a certain period of time
Accounting profit is a straightforward calculation of profit based on financial statements.
What is Economic Profit?
Profit remaining after opportunity costs associated with decision are included
Economic profit provides a more comprehensive view of profitability by considering alternative uses of resources.
What are Opportunity Costs?
Missed chances associated with decision-making
Opportunity costs reflect the potential benefits that are foregone when one alternative is chosen over another.
List the 8 Business Types.
- Government Operated organizations
- Community Owned Entities
- Non Profit
- Sole Proprietorship
- General Partnership
- S-Corps
- LLC/LLP
- C-Corp
Each type has unique characteristics, advantages, and disadvantages.
What are the Pros of Government Operated organizations?
- Public interest
- Stable
- Reliable
- Accountability
These organizations often focus on serving the community’s needs.
What are the Cons of Government Operated organizations?
- Innovation
- Political influences
- DEI
These factors can hinder the effectiveness and adaptability of government organizations.
What are the Pros of Community Owned Entities?
- Use funds by vote to stabilize small businesses
Community ownership can foster local economic development.
What are the Cons of Community Owned Entities?
Too many people can make it complex
Complexity can arise in decision-making processes.
What are the Pros of Non Profit organizations?
- Public support
- Tax exempt
Nonprofits can benefit from community goodwill and tax breaks.
What are the Cons of Non Profit organizations?
- Limited funding
- Extensive paperwork
Nonprofits often face challenges in securing resources and managing compliance.
What defines a Sole Proprietorship?
One owner, taxes investments, liabilities all placed on owner
This structure offers simplicity but also places full risk on the owner.
What are the Pros of Sole Proprietorship?
- Complete control
- Low paperwork
Owners can make decisions quickly without bureaucracy.
What are the Cons of Sole Proprietorship?
You are held liable
Personal assets can be at risk in the event of business failure.
Describe a General Partnership.
Business owned by 2 or more partners
Partnerships can pool resources but also share risks and responsibilities.
What are the Pros of a General Partnership?
- Less expensive
- Less paperwork
- Single taxation
Partnerships can be simpler to form and operate compared to corporations.
