Business Basics
The total amount of money a business brings in from selling goods or services, before subtracting expenses.
What is revenue?
This term describes consumers' willingness and ability to buy a product.
What is demand?
This is money that people or businesses are required to pay to a government to help fund public services.
What is a tax?
This is the money a lender charges you for borrowing money.
What is interest?
This business structure is owned by one individual and is generally easy and inexpensive to establish.
What is a proprietorship (sole proprietorship)?
A customer buys a product for $13.75 and pays with a $20 bill. This is how much change the customer should receive.
What is $6.25?
A store has many winter coats available, but very few customers want to buy them as spring approaches. This is what may happen to the coats' prices.
What is the price may decrease?
This is a tax placed on certain goods imported from another country.
What is a tariff?
This investment represents partial ownership in a company.
What is a stock?
This business structure typically involves two or more owners sharing ownership of a business.
What is a partnership?
A business earns $900 in revenue and has $650 in expenses. This is its profit.
What is $250?
A limited-edition sneaker becomes extremely popular, but the number available for sale stays the same. This is what will generally happen to its price.
What is the price may increase?
A student earns $500 and pays 20% in income tax. This is the amount of tax the student pays.
What is $100?
You deposit $1,000 into an account earning 5% simple annual interest. Assuming the rate stays the same, this is the interest earned after one year.
What is $50?
This business structure is a separate legal entity that can raise capital by issuing stock and generally provides its shareholders with limited liability.
What is a corporation?
A pair of shoes costs $80. The store offers a 25% discount. This is the final price before taxes.
What is $60?
A business sells 30 sandwiches for $5 each. This is the total revenue from those sales.
What is $150?
A product imported from another country costs $200. A 15% tariff is applied. Assuming the entire tariff is passed along, this is the new price before other taxes and fees.
What is $230? (15% of $200 = $30; $200 + $30 = $230)
You invest $500 and the investment grows by 10%. Assuming that return, this is the value of your investment after one year.
What is $550?
This business structure generally combines limited liability with flexibility in management and tax treatment.
What is an LLC (limited liability company)?
A business earns $1,200 in revenue, spends $700 on supplies, and pays $200 in other expenses. This is the business's profit.
What is $300?
A store sells 10 hoodies for $20 each. It then raises the price to $25 and sells only 8 hoodies. Revenue stays the same. Explain why.
What is because both situations generate $200 in revenue? (10 × $20 = $200; 8 × $25 = $200)
A government places a tariff on imported electronics. Name one possible benefit for domestic producers and one possible drawback for consumers.
What is:
- domestic producers face less competition
- consumers may pay higher prices for goods/alternatives
You invest $1,000 at a 10% annual compound return. Assuming the same return each year, this is the value of your investment after two years.
What is $1,210? ($1,000 × 1.10 = $1,100; $1,100 × 1.10 = $1,210)
An entrepreneur wants to grow a business substantially and attract many investors. Explain why a corporation might be a better fit than a sole proprietorship, and identify one possible drawback.
What is that a corporation can generally raise capital by issuing shares and offers shareholders limited liability, but may involve greater complexity, regulatory requirements, and potentially double taxation for a C corporation?