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General Business Midterm Study Guide

Terms in this set (48)

Wants add to the quality of life, but needs are essential and required to live. Wants are unlimited because people will always want the next big thing. Needs are also unlimited because people will always require certain things to live. A phone, TV, and computer are just some examples of wants. Some examples of needs are clean air, water, and food.
Differentiate wants and needs (similarities, differences, and examples). Give 3 complete sentences.
Goods are tangible, visible products that you can purchase, while services are intangible with no characteristics. Both goods and services meet wants and needs, but services satisfy more wants than needs. Services are consumed at the same time they are produced.
Differentiate goods and services (similarities, differences, and examples). Give 3 complete sentences.
Natural, human, capital
List 3 types of economic resources.
Earth and water
Give 2 examples of natural resources.
Farmers and entrepreneurs
Give 2 examples of human resources.
Tools and money
Give 2 examples of capital resources.
Human resources
people who produce goods and services
Natural resources
raw materials supplied by nature
Capital resources
products and money used to produce goods and services
Scarcity
not having enough resources to satisfy every need
Command (resources are owned and controlled by govern. & govern. may decide the specific schools and jobs for citizens), market (resources are owned and controlled by citizens & no one directs consumers to make a particular purchase), traditional (goods and services are produced by trade-offs & are mostly present in 3rd world countries)
List 3 major types of economic systems and give 2 characteristics of each.
In the market economy
Which of the 4 economic systems is the U.S. economic system in?
Private property, freedom of choice, profit, and competition
The U.S. economic system is based upon what 4 principles?
The Supply curve shows that when the price is high, businesses will supply more. The Demand curve shows that when the price is low, more consumers will buy. The market price is where the supply and demand are equal. This is where the two curves meet.
What are the relationships of supply and demand, and where do they meet? (definition, relationships, and the meeting point) Give 3 complete sentences.
supply
the quantity of goods and services that businesses are willing and able to produce
demand
the quantity of goods and services that consumers are willing and able to buy
producers, intermediaries, servicers
List 3 major types of businesses.
extractor & farmer
Give 2 examples of producers.
retailers & wholesalers
Give 2 examples of intermediaries.
physicians & lawyers
Give 2 examples of servicers.
sole proprietorship, partnership, corporation
What are the 3 types of business ownerships?
owned by 1 person & easiest to start
Name 2 characteristics of a sole proprietorship.
owned by 2 or more people & easy to start
Name 2 characteristics of a partnership.
owned by shareholders & not as easy to start because of legal requirements
Name 2 characteristics of a corporation.
pros: don't have to make hard decisions by yourself & don't have to pay debts by yourself, cons: might not agree on decision with partner & you have to share your profits
Give the pros and cons of a partnership.
pros: sole control over business decisions & owner receives all profits; cons: owner is personally responsible for all debts of the company
Give the pros and cons of a sole proprietorship.
pros: owners are only indebted up to the amount that they have invested, cons: board of directors make most business & profit sharing decisions
Give the pros and cons of a corporation.
Proprietorship
What type of business ownership has the largest percent?
Partnership
What type of business ownership has the smallest percent?
Corporation
What type of business ownership receives the most revenue?
Proprietor
There are more ___________ ownerships than any other types of ownerships.
persistent, inquisitive, energetic, independent, creative, and competitive
List 6 characteristics of successful entrepreneurship.
USA
Who is the largest producer of goods?
easier to meet customer needs, provide unique services, & depends less on other business to distribute or service their products
What are 3 competitive advantages faced by small business?
not keeping adequate records, not having enough start-up money, & lack of management experience
What are 3 problems faced by small business?
an idea plus experience, right place and time (location), preparation & research
What are 3 factors to consider when starting a business?
product & service management, distribution, selling, marketing-information management, financial analysis, pricing, & promotion
List the 7 marketing functions.
supply & demand, season, complexity, convenience
What are the 4 components of selling price?
Revenue
all income that a business receives over a period of time
Expenses
the costs of operating a business
Profit
if revenue is greater than expenses, the business will make a __________.
Assets
what a company owns
Liabilities
what a company owes
Owner's equity
the value of the owner's investment in the business
live within your income, achieve your financial goals, buy wisely, avoid credit problems, plan for financial emergencies, & develop good money management skills
What are the 6 purposes of a budget?
risk: the chance of a loss or profit, safety: assurance that the money you invest will be returned to you
Define risk and safety.
Investments with individuals or businesses usually earns higher interest b/c there is less safety. B/c someone is risking a lot this way, the return will be higher. You are most likely to receive a small return and have a lower risk if you invest in things (bank savings accounts, U.S. saving bonds) that have a guaranteed return. But, if you invest in something (commodities, rare gems, collectibles) that varies in prices and has a higher risk, there is a chance you will receive a high-value return.
How do risk and safety affect return on investment? Give 3 complete sentences.
An example would be a rare gem b/c even though it is valuable now, someone may hit the motherhood and find a huge surplus of those gems, causing its price to drop because it isn't rare anymore.
Give an example of how risk and safety affect return on investment.
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