REVIEW QUESTIONS
0
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, 1
Introduction to Business
Chapter 1: Understanding Economics Systems and Business
1.1 The Nature of Business
Businesses attempt to earn a profit by providing goods and services desired by their customers.
Not-for-profit organizations, though not striving for a profit, still deliver many needed services
for our society. Our standard of living is measured by the output of goods and services. Thus,
businesses and not-for-profit organizations help create our standard of living. Our quality of life
is not simply the amount of goods and services available for consumers but rather the society’s
general level of happiness.
Economists refer to the building blocks of a business as the factors of production. To produce
anything, one must have natural resources, labor (human resources), capital, and
entrepreneurship to assemble the resources and manage the business. Today’s competitive
business environment is based upon knowledge and learning. The companies that succeed will
be those that learn fast, use knowledge efficiently, and develop new insights.
1.1 Review Questions
1. Define the following terms in your own words
a. Business
b. Standard of living
c. Quality of life
d. Revenue
e. Risk
f. Costs
g. Profit
2. What is the difference between goods and services?
3. What is the relationship between quality of life and risk?
4. What is the purpose of not-for-profit organizations?
5. List the 4 traditional factors of production and their significance.
a.
b.
c.
d.
6. What is the fifth factor of production, and what is its role in business?
For more free, peer-reviewed, openly licensed resources visit OpenStax.org.
0
For more free, peer-reviewed, openly licensed resources visit OpenStax.org.
, 1
Introduction to Business
Chapter 1: Understanding Economics Systems and Business
1.1 The Nature of Business
Businesses attempt to earn a profit by providing goods and services desired by their customers.
Not-for-profit organizations, though not striving for a profit, still deliver many needed services
for our society. Our standard of living is measured by the output of goods and services. Thus,
businesses and not-for-profit organizations help create our standard of living. Our quality of life
is not simply the amount of goods and services available for consumers but rather the society’s
general level of happiness.
Economists refer to the building blocks of a business as the factors of production. To produce
anything, one must have natural resources, labor (human resources), capital, and
entrepreneurship to assemble the resources and manage the business. Today’s competitive
business environment is based upon knowledge and learning. The companies that succeed will
be those that learn fast, use knowledge efficiently, and develop new insights.
1.1 Review Questions
1. Define the following terms in your own words
a. Business
b. Standard of living
c. Quality of life
d. Revenue
e. Risk
f. Costs
g. Profit
2. What is the difference between goods and services?
3. What is the relationship between quality of life and risk?
4. What is the purpose of not-for-profit organizations?
5. List the 4 traditional factors of production and their significance.
a.
b.
c.
d.
6. What is the fifth factor of production, and what is its role in business?
For more free, peer-reviewed, openly licensed resources visit OpenStax.org.
