Cost Calculation
What type of costs stay the same no matter how many products are produced (e.g., Rent, Insurance)?
Fixed Costs
What is the basic equation for Total Revenue?
Price × Quantity (TR = $ × Q)
What is the most common form of business ownership, defined as a business owned by one person?
Sole Proprietorship
Which of the 6 Basic Business Activities involves promoting, selling, and delivering products?
Marketing
What is the short statement that defines the reason a business exists and what they want to achieve?
Mission Statement
What is the equation for Total Cost?
Fixed Cost + Variable Cost (TC = FC + VC)
To make a profit, Total Revenue must be greater than what?
Total Cost (Profit = TR > TC)
In a General Partnership, what kind of liability do owners have (meaning they can lose personal assets)?
Unlimited Liability
What term describes financial and physical resources (like factories and trucks) used for production?
Capital
What principle states that an employee should have a clear reporting relationship to only one manager?
Unity of Command (Chain of Command)
Billy Bob’s Pizzeria has a Total Cost of $1,500 to make 1,000 pizzas. What is his Average Total Cost (ATC) per pizza?
$1.50 (ATC = 1500 / 1000)
What term describes the additional revenue gained from selling one additional product or service?
Marginal Revenue
What is the major advantage of a Corporation regarding the owner's personal risk?
Limited Liability
What is the difference between an Extractor and a Manufacturer?
Extractors take resources from nature (mining/farming); Manufacturers convert supplies into products.
Who ultimately owns a corporation and elects the Board of Directors?
Stockholders
If a business produces 50,000 units at $3,000, and 50,002 units at $3,010, what is the Marginal Cost of the 2 additional units?
$5 per unit ($10 change in cost / 2 change in quantity)
According to the Profit Maximization Rule, a business should continue to produce as long as Marginal Revenue is equal to or greater than what?
Marginal Cost (MR = MC)
What is the specific business type that is a hybrid between a partnership and corporation, offering limited liability but avoiding double taxation?
Limited Liability Company (LLC)
What is the difference between Outsourcing and Offshoring?
Outsourcing is transferring work to a different company; Offshoring is moving work to a different country.
Which organizational structure arranges work around specific projects rather than separate departments?
Matrix Organizational Structure
According to the Law of Diminishing Marginal Returns, if you add additional units of a resource to a fixed supply, what eventually happens to the additional output?
The additional output produced will decrease.
A firm has $400 Fixed Costs and $200 Variable Costs. They sell 50 jeans at $20 each. Calculate the Total Cost, Total Revenue, and final Profit.
TC = $600; TR = $1,000; Profit = $400.
Identify the disadvantage of a Corporation where the business profit is taxed, and then investor dividends are taxed again.
Double Taxation
Service businesses (like doctors or plumbers) now make up what percentage of all U.S. employment?
Over 60%
In the "Chick-Fil-A" example from the notes, this business model allows an individual to use a firm's name and sell products in exchange for payments.
Franchise