DECA-PHT Exam Study Guide

DECA-PHT Exam Study Guide Distinguish between economic goods and services (EC:002) (CS) - Economic goods are tangible items that a person wants or need therefore exchanges for money *Ex.* food, clothing, toys ~ Services are also exchanged for money, but an activity or service is provided or preformed. *Ex.* hairdresser, doctor checkup, teacher Explain the concept of economic resources (EC:003) (CS) - Economic resources are the factors behind producing goods or providing services. *land*: the natural resources from the land (water, oil, timber) *labor*: the human resources (employees) *capital*: operating equipment (trucks, supplies, machinery) *entrepreneurship* the people behind the business idea Describe the concepts of economics and economic activities (EC:001) (CS) - Economics is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behavior and interactions of economic agents and how economies work. Economic activities is the production process, distribution, and consumption. Determine economic utilities created by business activities (EC:004) (CS) - *form:* what the business offers *time:*the availability to a product or service when a consumer wants it *place:* the location of the business or how easy it is to find on the internet *possession* the benefits of the goods they purchase (ex. headphones) Explain the principles of supply and demand (EC:005) (CS) - *Supply:* availability of good/service *Demand:* public desire for good/service *Law of Supply:* price and supply are positively correlated because it is more profitable and suppliers are more willing to produce/offer good/service *Law of Demand:*price and supply are negatively correlated because less people are willing to pay for said good/service *Elasticity:* sensitivity of supply/demand to increasingly subtle changes in price (high elasticity = sensitive to smaller changes in price, no elasticity = no change in supply/demand regardless of price) *Market Equilibrium:* price at which supply and demand are equal, correlates with equilibrium quantity, assessed by economists in order to avoid shortage or surplus *Shortage:* price too low, supply less than demand, not enough for every consumer *Surplus:* price too high, supply higher than demand, capital wasted on resources for things no one wants *Factors Affecting Supply:*Resource Price - negative correlation~Related Product Price - negative correlation~Number of Suppliers - positive correlation~Technological Advancement - positive correlation~Expected Future Prices - positive correlation Describe the functions of prices in markets (EC:006) (CS) - The prices will fluctuate depending on supply on demand. If supply is high, price will be lower and visa versa. Explain the role of business in society (EC:070) (CS) - To provide to the wants and needs of people making life easier or better for them Describe types of business activities (EC:071) (CS) - Cash flow statement- *operational:* what is takes to run the business (expenses, supplies and equipment) *investing:*capitalized over more than one year. The purchase of long-term assets is recorded as a use of cash in this section (ex. capital expenditures) *financing:* provides an overview of all business activities related to financing. (initial public offerings, secondary offerings and debt financing) also the amount of cash being paid out for dividends, share repurchases and interest. Any business activity related to financing and fundraising efforts is included in this section of the cash flow statement Describe types of business models (EC:138) (SP) - Describe types of business models (EC:138)