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What does economics have to do with scarcity?
Economics is all about scarcity, a problem that has existed ever since the beginning of human kind, a problem faced by rich and poor, and a problem confronting both individuals and societies.
How is "Land" a factor of production?
It is the physical ground and natural resources, such as minerals, used in the production of goods. It also refers to anything that is not man‐made and can be used to produce goods. Natural resources, such as minerals and fossil fuels, are the back bone to many giant mining companies. Soil is also a natural factor that supports economic activities such as farming.
What does "Labor" refers to as a factor of production?
“Labor” refers to the work and production activities provided by humans for monetary compensation. This consists of various abilities and skills that human beings apply to enhance production of goods and services and ensures that business is up and running.
What does "Capital" refers to as a factor of production?
“Capital” refers to the use of wealth to create more wealth by enhancing the production of goods. Apart from money, capital also refers to tools, machinery, and infrastructure made to produce other goods. For example, in producing crops or livestock, a farmer will need to include farming equipment and other machinery as capital.
What are the 3 entities of the economic flow?
Consumer, Business, Government
What are 3 Characteristics of an entrepreneur?
Leadership, Opportunistic, Focus, Risk Taker, Passion, Strong work ethic, Determination, Creativity, Competitiveness, Open Minded, Confidence, Disciplined, etc.
What is a Traditional Economic System?
People's economic roles are the same as those of their parents and grandparents.Tradition decides what our people do for a living and how our work is performed.
What is a Market Economic System?
Economic decisions are the result of individual decisions by buyers and sellers in the marketplace. Countries like the U.S and other developed nations have many elements of a market economic system.The success that businesses have will depend on the demand by consumers for their goods or services. In such a business you may do well. But if people do not want what you are selling, you will go out of business.
What is a Command Economic System?
In a command economic system, the main decision maker is the government. No person may independently decide to open and run any kind of business. The government decides what goods and services are to be produced. And the government sells these goods and services. The government also decides how the talents and skills of its workers are to be used.
What is the purpose of a business plan?
A business plan has three primary purposes:
1) To serve as an Action Plan
2) To serve as a Road Map
3) To serve as a Sales Tool
A typical entrepreneur is:
hint: (age group, gender, birthplace, goals, experience)
Male, 40s, born in the US, just trying to make a living, and has prior experience
What is supply and demand?
1) most crucial factors in determining prices of goods and services
2) the amount of a commodity, product, or service available and the desire of buyers for it, considered as factors regulating its price
What is the Triple Bottom Line?
Social Success
Economic Success
Environmental Success
What is the "elasticity of demand"?
Elasticity of demand refers to the degree to which demand for a good or service varies with its price. Normally, sales increase with a drop in prices and decrease with a rise in prices.
What is the "elasticity of supply"?
Elasticity of supply refers to the responsiveness of producers to changes in the price of their goods or services. As a general rule, if prices rise, so does the supply.
What are the building blocks of free enterprise system?
1) Households—the Owners.
2) Businesses—the Organizers
3) Markets—the Brokers
4) Governments—the Protectors
What are the five basic principles of the U.S. economic system?
1) Freedom to Choose Your Businesses (Free Enterprise)
2) Right to Private Property
3) Profit Motive
4) Competition
5) Consumer Sovereignty
What does sustainable growth consist of?
Businesses are able to establish targets in relation to each of the aspects of the bottom line—for example, by increasing profit by x % (economic success), gaining employee satisfaction of y% (social success), and minimizing their environmental impact (environmental success). The success of businesses can then be judged in terms of their ability to meet important targets and creating a cycle of stake holders satisfaction.
Successful businesses take a long‐term rather than a short‐term view of success. Attaining success involves meeting objectives for a range of desirable outcomes, which create a cycle of stake holder satisfaction.
What is the law of supply?
1) at higher prices, producers are willing to offer more products for sale than at lower prices
2) the supply of goods and services increases as prices increase and decreases as prices decrease
What is the law of demand?
1) people will buy more of a product at a lower price than at a higher price
2) at a lower price, more people can afford to buy more goods than they can at a higher price
What is a business plan and why do I need one?
It is a written document, which precisely defines your business. It identifies your goals and serves as your firm's resume. It helps you allocate resources properly, handle unforeseen complications, and make the right decisions. Because it provides specific and organized information about your company and how you will repay borrowed money, a good business plan is a crucial part of any loan package.
A business plan lays out what the business will produce and explains how it will be produced and who will be the consumers of the product/service the business is producing. Furthermore, it addresses who will operate the business and who will supply the products/services required to run the business. Such a plan also describes how the firm will attract new customers and retain previous customers. Finally, the business plan contains statements that attest to the financial health of the company.
What are the degrees of competition differentiates the four types of market structures? Explain each.
Perfect competition= 1) the product sold by any one seller is identical to the product sold by any other seller; 2) there are many buyers and sellers, so that no one buyer or seller can affect the market price—instead, all buyers and sellers must accept the market price; and 3) resources move to the most profitable industry.
Monopolistic Competition is a market characterized by many sellers. Unlike perfect competition, the sellers under monopolistic competition differentiate competitive products. Product differentiation is accomplished by changing the physical composition, using special packaging, or simply claiming to have a superior products based on brand images and/or advertising
Oligopoly is a market controlled by a small number of sellers. An important characteristic of an oligopolistic market structure is the interdependence of firms in the industry. The interdependence, actual or perceived, arises from the small number of firms in the industry. However, unlike monopolistic competition, if an oligopolistic firm changes its price or output, it has a significant effect on the sales and profits of its competitors. Thus, an oligopolistic firm always considers the reactions of its rivals in setting its prices or making output decisions
Monopoly is the opposite of perfect competition. It is a market form in which there is only one seller. There are many factors that give rise to a monopoly. A monopoly may arise due to declining costs of production for a particular product. In such a case the average cost of production falls and reaches a minimum at an output level that is sufficient to satisfy the entire market. In such an industry, rival firms will be eliminated until only the strongest firm is left in the market. Thus, one may technically say that there is no competition under monopoly
What are the Three Attributes of Economic Indicators?
1. Relation to the Business Cycle / Economy: A pro‐cyclical economic indicator is one that moves in the same direction as the economy. So if the economy is doing well, this number is usually increasing, whereas if the economy is doing poorly, this indicator is decreasing. The Gross Domestic Product (GDP) is an example of a pro cyclical economic indicator.
2. Frequency of the Data Some indicators are released every three months (e.g., Gross Domestic Product), some monthly (e.g., unemployment rate), and still others are available immediately and change minute‐by‐ minute
3. Timing: Economic Indicators can be leading, lagging, or coincident, which indicates the timing of their changes relative to how the economy as a whole changes.
What are the 4 stages of a business cycle?
1. Contraction – When the economy starts slowing down.
2. Trough – When the economy hits bottom, usually in a recession.
3. Expansion – When the economy starts growing again.
4. Peak – When the economy hits it highest point, in terms of growth, before heading lower.
What are the types of tax and its description?
1) Income Taxes: Many states, some cities, and the federal government impose an income tax. People with higher incomes generally pay not only a greater amount of money, but a higher percentage of their income in taxes than people with lower incomes.
2) Corporates Taxes: Such taxes are levied on the profits of businesses. Businesses with higher earnings generally pay not only a greater amount of money, but a higher percentage of their earnings in taxes than people with lower earnings.
3) Property Taxes: These taxes are imposed mostly on real estate owners.
4) Sales Taxes: Such taxes are levied by state and local governments (there is no federal sales tax) at the point of purchase for specific goods and services. The level of government charging the tax determines the tax rate.