Ch1
What are the four types of competition in a market?
Pure competition, monopolistic competition, oligopoly, and monopoly.
Define business ethics.
Principles that define right and wrong behavior in business.
What is a trade barrier?
A restriction on international trade (e.g., tariffs, quotas, or embargoes).
What is the main advantage of a sole proprietorship?
Simple to establish and owner keeps all profits.
Name one reason why small businesses fail.
Lack of capital, poor management, or inadequate marketing.
Name two ways businesses measure economic performance.
GDP and unemployment rate.
What is the difference between ethical behavior and social responsibility?
Ethics is about individual behavior; social responsibility is about the impact on society.
Name one method businesses use to enter global markets.
Exporting, licensing, franchising, joint ventures, or direct investment.
Describe one difference between an LLC and a corporation.
LLCs provide limited liability without the formalities of a corporation.
What is a business plan, and why is it important for entrepreneurs?
A business plan outlines goals, strategies, and financial forecasts for success.
What is the business cycle, and name its four phases.
Expansion, peak, contraction, and trough.
List three common ethical issues businesses face.
Bribery, discrimination, and insider trading.
What is an exchange rate, and how does it affect international trade?
The value of one currency in terms of another; it affects the cost of imports and exports.
What is a partnership agreement, and why is it important?
A document that outlines the terms and responsibilities of business partners.
What is bootstrapping in entrepreneurship?
Using personal savings and revenue to finance a business.
Define GDP and explain its importance to the economy.
Gross Domestic Product; it measures the total value of goods and services produced in a country.
What is a code of ethics, and why is it important?
A formal statement outlining a company’s values and expected behavior.
Define a joint venture and explain its advantage in global business.
A joint venture is a business partnership between two companies to share risks and rewards.
List two advantages and two disadvantages of forming a corporation.
Advantages: Limited liability, raising capital; Disadvantages: Double taxation, complex setup.
List three key elements of a business plan.
Executive summary, market analysis, and financial projections.
Explain the difference between capitalism and a command economy.
Capitalism is a market-driven economy; command economy is controlled by the government.
Explain the concept of corporate social responsibility (CSR) with an example.
CSR is when companies act in ways that benefit society, e.g., reducing pollution or supporting local communities.
Explain how tariffs and quotas impact global business.
Tariffs increase the cost of imports; quotas limit the quantity that can be imported.
Explain the concept of limited liability and why it is important for business owners.
Limited liability protects personal assets from business debts.
Explain the difference between angel investors and venture capitalists.
Angel investors provide early-stage funding; venture capitalists invest larger sums later for equity.