Bus 101 terms UPDATED ACTUAL Exam
Questions and CORRECT Answers
business - CORRECT ANSWER - organization that provides goods or services to earn
profits.
profit - CORRECT ANSWER - difference between a business's revenues and its expenses.
external environment - CORRECT ANSWER - everything outside an organization's
boundaries that might affect it
factors of production - CORRECT ANSWER - resources used in the production of goods
and services -- labor, capital, entrepreneurs, physical resources, and information resources.
economic system - CORRECT ANSWER - a nation's system for allocating its resources
among its citizens.
labor (human resources) - CORRECT ANSWER - physical and mental capabilities of
people as they contribute to economic production.
capital - CORRECT ANSWER - funds needed to create and operate a business enterprise
entrepreneur - CORRECT ANSWER - individual who accepts the risks and opportunities
involved in creating and operating a new business
planned economy - CORRECT ANSWER - economy that relies on a centralized
government to control all or most factors of production and to make all or most production and
allocation decisions
,communism - CORRECT ANSWER - political system in which the government owns and
operates all factors of production
market economy - CORRECT ANSWER - economy in which individuals control
production and allocation decisions through supply and demand
market - CORRECT ANSWER - mechanism for exchange between buyers and sellers of a
particular good or service
capitalism - CORRECT ANSWER - system that sanctions the private ownership of the
factors of productions and encourages entrepreneurship by offering profits as an incentive
privatization - CORRECT ANSWER - process of converting government enterprises into
privately owned companies
socialism - CORRECT ANSWER - planned economic system in which the government
owns and operates only selected major outsources of production
demand - CORRECT ANSWER - the willingness and ability of buyers to purchase a good
or service
supply - CORRECT ANSWER - the willngness and ability of producers to offer a good or
service for sale
private enterprise - CORRECT ANSWER - economic system that allows individuals to
pursue their own interests without undue governmental restriction
competition - CORRECT ANSWER - vying among business for the same resources or
customers
, perfect competition - CORRECT ANSWER - market or industry characterized by
numerous small firms producing an identical product
monopolistic competition - CORRECT ANSWER - market or industry characterized by
numerous buyers and relatively numerous sellers trying to differentiate their products from those
of competitors
monopoly - CORRECT ANSWER - market or industry in which there is only one
producer that can therefore set the prices of it products
natural monopoly - CORRECT ANSWER - industry in which one company can most
efficiently supply all needed goods or services
standard of living - CORRECT ANSWER - the total quantity of goods and services
produced by an economic system during a given period
gross domestic product (GDP) - CORRECT ANSWER - total value of all goods and
services produced within a given period by a national economy through domestic factors of
production
gross national product (GNP) - CORRECT ANSWER - total value of all goods and
services produced by a national economy within a given period regardless of where the factors of
production are located
real GDP - CORRECT ANSWER - gross domestic product (GDP) adjusted to account for
changes in currency values and price changes
purchasing power parity (PPP) - CORRECT ANSWER - the principle that exchange rates
are set so that the prices of similar products in different countries are about the same
inflation - CORRECT ANSWER - occurs when widespread price increases occur
throughout an economic system
Questions and CORRECT Answers
business - CORRECT ANSWER - organization that provides goods or services to earn
profits.
profit - CORRECT ANSWER - difference between a business's revenues and its expenses.
external environment - CORRECT ANSWER - everything outside an organization's
boundaries that might affect it
factors of production - CORRECT ANSWER - resources used in the production of goods
and services -- labor, capital, entrepreneurs, physical resources, and information resources.
economic system - CORRECT ANSWER - a nation's system for allocating its resources
among its citizens.
labor (human resources) - CORRECT ANSWER - physical and mental capabilities of
people as they contribute to economic production.
capital - CORRECT ANSWER - funds needed to create and operate a business enterprise
entrepreneur - CORRECT ANSWER - individual who accepts the risks and opportunities
involved in creating and operating a new business
planned economy - CORRECT ANSWER - economy that relies on a centralized
government to control all or most factors of production and to make all or most production and
allocation decisions
,communism - CORRECT ANSWER - political system in which the government owns and
operates all factors of production
market economy - CORRECT ANSWER - economy in which individuals control
production and allocation decisions through supply and demand
market - CORRECT ANSWER - mechanism for exchange between buyers and sellers of a
particular good or service
capitalism - CORRECT ANSWER - system that sanctions the private ownership of the
factors of productions and encourages entrepreneurship by offering profits as an incentive
privatization - CORRECT ANSWER - process of converting government enterprises into
privately owned companies
socialism - CORRECT ANSWER - planned economic system in which the government
owns and operates only selected major outsources of production
demand - CORRECT ANSWER - the willingness and ability of buyers to purchase a good
or service
supply - CORRECT ANSWER - the willngness and ability of producers to offer a good or
service for sale
private enterprise - CORRECT ANSWER - economic system that allows individuals to
pursue their own interests without undue governmental restriction
competition - CORRECT ANSWER - vying among business for the same resources or
customers
, perfect competition - CORRECT ANSWER - market or industry characterized by
numerous small firms producing an identical product
monopolistic competition - CORRECT ANSWER - market or industry characterized by
numerous buyers and relatively numerous sellers trying to differentiate their products from those
of competitors
monopoly - CORRECT ANSWER - market or industry in which there is only one
producer that can therefore set the prices of it products
natural monopoly - CORRECT ANSWER - industry in which one company can most
efficiently supply all needed goods or services
standard of living - CORRECT ANSWER - the total quantity of goods and services
produced by an economic system during a given period
gross domestic product (GDP) - CORRECT ANSWER - total value of all goods and
services produced within a given period by a national economy through domestic factors of
production
gross national product (GNP) - CORRECT ANSWER - total value of all goods and
services produced by a national economy within a given period regardless of where the factors of
production are located
real GDP - CORRECT ANSWER - gross domestic product (GDP) adjusted to account for
changes in currency values and price changes
purchasing power parity (PPP) - CORRECT ANSWER - the principle that exchange rates
are set so that the prices of similar products in different countries are about the same
inflation - CORRECT ANSWER - occurs when widespread price increases occur
throughout an economic system
