LHR 427 EXAM 1- 2 EXAM STUDY GUIDE
Business - Answer -Any entity (individual or organization) that aims at generating profit
via providing products that satisfy consumers' needs
Products - Answer -Tangible- goods
intangible-services or ideas
Demand - Answer -How many products are consumers willing to purchase at different
prices at a specific time?
Supply - Answer -How many products are businesses willing to sell at different prices at
a specific time?
Equilibrium prices - Answer -The price at which: number of products businesses are
willing to supply = the number of products consumers are willing to purchase at a
specific time
Revenue - Answer -The total amount of money a business takes in during a given
period by selling goods and services.
Profit - Answer -The amount of money a business earns above and beyond what it
spends for salaries and other expenses
Loss - Answer -When a business's expenses are more than its revenues.
How does earning profits contribute to society? - Answer --Creating more jobs
-Paying taxes
-Corporate social responsibility
Who is an entrepreneur? - Answer -Someone who assumes the risk of starting a
business
Risks of being an entrepreneur - Answer -losing time and money on a business that
may not be profitable
Approximately 175,00 businesses in the US close every year
Advantages of Entrepreneurship - Answer -freedom the succeed, make your own
decisions, possible wealth, sense of self
Disadvantages of entrepreneurship - Answer -freedom to fail, no paid vacations, no
health insurance, responsible for others welfare, ego depletion, personal sacrifices
,higher-order needs - Answer -Needs that are satisfied internally, such as social,
esteem, and self-actualization needs.
lower order needs - Answer -needs that are satisfied externally, such as physiological
and safety needs
Maslow's Hierarchy of Needs - Answer -physiological, safety and security ,
love/belonging, esteem, self-actualization
progression hypothesis - Answer -must satisfy lower level needs before higher levels
become important. The lowest level ungratified needs motivates behavior. Love and
belonging also called social
Standard of living - Answer -the amount of goods and services people can buy with the
money they have.
quality of life - Answer -The general well-being of a society in terms of its political
freedom, natural environment, education, health care, safety, amount of leisure, and
rewards that add to the satisfaction and joy that other goods and services provide.
Stakeholders - Answer -All the people who stand to gain or lose by the policies and
activities of a business and whose concerns the business needs to address.
Shareholders - Answer -all the people or in general entities who own a part of pf a
publicly traded firm via a share or stock
Outsourcing - Answer -Contracting with other companies (often in other countries) to do
some or all of the functions of a firm, like its production or accounting tasks.
Advantages of Outsourcing - Answer -Access talent, reduce operating costs, focusing
on core business/ freeing talent
Disadvantages of outsourcing - Answer -reduced control over quality of work or even
the working conditions, substandard work-more expensive to fix, disconnect among
employees, lack of coherent culture
For-profit organizations - Answer -aim at maximization of profits for their shareholders.
nonprofit organization - Answer -have a social mission, do not aim at creating profits,
typically receive gov funds, donations or grants
Social enterprises - Answer -have a duel mission: social and commercial, profits
generated are used to support their social mission
Five Factors of Production - Answer -land, labor, capital, entrepreneurship, knowledge
, Economic systems address 3 important issues - Answer --What goods and services
and how much of each, will satisfy consumers needs?
-how will goods and services be produced who will produce them, and with what
resources will they be produced?
-How are the goods and services to be distributed to consumers?
Communism - Answer -first described by Karl Marx as a society in which the people,
without regard to class, own all the nation's resources
Socialism - Answer -an economic system in which the government owns and operates
basic industries but individuals own most businesses
Capitalism - Answer -an economic system in which individuals own and operate the
majority of businesses that provide goods and services
Pure capitalism - Answer -happens when all economic decisions are made without
government intervention
, also called laissex- faire capitalism
Modified Capitalism - Answer -government intervenes and regulates business to some
extent
Government can promote entrepreneurship by: - Answer -Allowing private ownership of
businesses, keeping taxes and regulations to a minimum, having contract laws-having
enforceable contracts, tradable currency, minimizing corruption
Technological Environment - Answer -information technology, databases, bar codes,
the internet
competitive environment - Answer -customer service, stakeholder recognition,
employee service, concern for the environment
pure competition - Answer -the market structure that exists when there are many small
businesses selling one standardized product
monopolistic competition - Answer -Fewer businesses than in a pure competition and
the differences among the goods they sell are small
Oligopoly - Answer -the market structure that exists when there are very few
businesses selling a product
Monopoly - Answer -the market structure that exists when there is only one business
providing a product in a given market
oligopsony - Answer -the market structure that exists when there are ver few buyers for
a specific product
Business - Answer -Any entity (individual or organization) that aims at generating profit
via providing products that satisfy consumers' needs
Products - Answer -Tangible- goods
intangible-services or ideas
Demand - Answer -How many products are consumers willing to purchase at different
prices at a specific time?
Supply - Answer -How many products are businesses willing to sell at different prices at
a specific time?
Equilibrium prices - Answer -The price at which: number of products businesses are
willing to supply = the number of products consumers are willing to purchase at a
specific time
Revenue - Answer -The total amount of money a business takes in during a given
period by selling goods and services.
Profit - Answer -The amount of money a business earns above and beyond what it
spends for salaries and other expenses
Loss - Answer -When a business's expenses are more than its revenues.
How does earning profits contribute to society? - Answer --Creating more jobs
-Paying taxes
-Corporate social responsibility
Who is an entrepreneur? - Answer -Someone who assumes the risk of starting a
business
Risks of being an entrepreneur - Answer -losing time and money on a business that
may not be profitable
Approximately 175,00 businesses in the US close every year
Advantages of Entrepreneurship - Answer -freedom the succeed, make your own
decisions, possible wealth, sense of self
Disadvantages of entrepreneurship - Answer -freedom to fail, no paid vacations, no
health insurance, responsible for others welfare, ego depletion, personal sacrifices
,higher-order needs - Answer -Needs that are satisfied internally, such as social,
esteem, and self-actualization needs.
lower order needs - Answer -needs that are satisfied externally, such as physiological
and safety needs
Maslow's Hierarchy of Needs - Answer -physiological, safety and security ,
love/belonging, esteem, self-actualization
progression hypothesis - Answer -must satisfy lower level needs before higher levels
become important. The lowest level ungratified needs motivates behavior. Love and
belonging also called social
Standard of living - Answer -the amount of goods and services people can buy with the
money they have.
quality of life - Answer -The general well-being of a society in terms of its political
freedom, natural environment, education, health care, safety, amount of leisure, and
rewards that add to the satisfaction and joy that other goods and services provide.
Stakeholders - Answer -All the people who stand to gain or lose by the policies and
activities of a business and whose concerns the business needs to address.
Shareholders - Answer -all the people or in general entities who own a part of pf a
publicly traded firm via a share or stock
Outsourcing - Answer -Contracting with other companies (often in other countries) to do
some or all of the functions of a firm, like its production or accounting tasks.
Advantages of Outsourcing - Answer -Access talent, reduce operating costs, focusing
on core business/ freeing talent
Disadvantages of outsourcing - Answer -reduced control over quality of work or even
the working conditions, substandard work-more expensive to fix, disconnect among
employees, lack of coherent culture
For-profit organizations - Answer -aim at maximization of profits for their shareholders.
nonprofit organization - Answer -have a social mission, do not aim at creating profits,
typically receive gov funds, donations or grants
Social enterprises - Answer -have a duel mission: social and commercial, profits
generated are used to support their social mission
Five Factors of Production - Answer -land, labor, capital, entrepreneurship, knowledge
, Economic systems address 3 important issues - Answer --What goods and services
and how much of each, will satisfy consumers needs?
-how will goods and services be produced who will produce them, and with what
resources will they be produced?
-How are the goods and services to be distributed to consumers?
Communism - Answer -first described by Karl Marx as a society in which the people,
without regard to class, own all the nation's resources
Socialism - Answer -an economic system in which the government owns and operates
basic industries but individuals own most businesses
Capitalism - Answer -an economic system in which individuals own and operate the
majority of businesses that provide goods and services
Pure capitalism - Answer -happens when all economic decisions are made without
government intervention
, also called laissex- faire capitalism
Modified Capitalism - Answer -government intervenes and regulates business to some
extent
Government can promote entrepreneurship by: - Answer -Allowing private ownership of
businesses, keeping taxes and regulations to a minimum, having contract laws-having
enforceable contracts, tradable currency, minimizing corruption
Technological Environment - Answer -information technology, databases, bar codes,
the internet
competitive environment - Answer -customer service, stakeholder recognition,
employee service, concern for the environment
pure competition - Answer -the market structure that exists when there are many small
businesses selling one standardized product
monopolistic competition - Answer -Fewer businesses than in a pure competition and
the differences among the goods they sell are small
Oligopoly - Answer -the market structure that exists when there are very few
businesses selling a product
Monopoly - Answer -the market structure that exists when there is only one business
providing a product in a given market
oligopsony - Answer -the market structure that exists when there are ver few buyers for
a specific product
