BADM 101 Exam #1 Questions and
Answers
Stakeholders - ANSWER-are all the different people or groups of people who are
affected by the policies and decisions made by an organization
Stakeholders include:
-Consumers
-Marketing intermediaries
-Stockholders
-Employees
Economics - ANSWER-the study of how wealth (anything of value) is created and
distributed
Microeconomics - ANSWER-the study of the decisions made by individuals and
businesses
Macroeconomics - ANSWER-the study of the national and global economies
Factors of production - ANSWER-the resources used to produce goods and services
Land and natural resources—elements that can be used in the production process
Labor—time and effort used to produce goods and services
Capital—money, facilities, equipment, and machines used in the operation of
organizations
Entrepreneurship—activity that organizes land and natural resources, labor, and
capital
Entrepreneur - ANSWER-a person who risks his or her time, effort, and money to
start and operate a business
Economy - ANSWER-the system through which a society creates and distributes
wealth
Capitalism - ANSWER-an economic system in which individuals own and operate
the majority of businesses that provide goods and services
Invisible hand - ANSWER-a term created by Adam Smith to describe how an
individual's own personal gain benefits others and a nation's economy
Laissez-faire - ANSWER-Implies that there should be no government interference in
the economy
Loosely translated, this term means "let them do" (as they see fit).
Is based on the concept of a market economy
, market economy - ANSWER-an economic system in which:
Businesses and individuals decide what to produce and buy
The market determines prices and quantities sold
mixed economy - ANSWER-one that exhibits elements of both capitalism and
socialism
Consumer products - ANSWER-goods and services purchased by individuals for
personal consumption
Businesses: - ANSWER-Produce goods and services to exchange for revenues
(money)
Use revenues to purchase factors of production
Households - ANSWER-Consume goods and services
Government - ANSWER-Provides public services in exchange for taxes
command economy - ANSWER-an economic system in which the government
decides:
What goods and services will be produced
How they will be produced
For whom available goods and services will be produced
Who owns and controls the major factors of production
Today, two types of economic systems serve as examples of command economies: -
ANSWER-Socialism & Communism
Socialism Government: - ANSWER-Decides what will be produced, how it will be
produced, and who owns and controls the factors
of production
Owns and controls key industries
Workers may choose their own occupations
Goal is to equally distribute income, eliminate poverty, provide social services, and
eliminate economic waste
Small-scale private businesses may be permitted
Communism Government - ANSWER-Owns and controls all factors of production
Plans production to meet the needs of the state
Dictates occupations, wages, and prices
The goal is to create a classless society where all contribute according to their ability
and receive benefits according to their needs
No private businesses are allowed
Productivity - ANSWER-The average level of output per worker per hour
Gross Domestic Product (GDP) - ANSWER-The total value of all goods and services
produced by all people within the boundaries of a country during a one-year period
Inflation - ANSWER-a general rise in the level of prices
Answers
Stakeholders - ANSWER-are all the different people or groups of people who are
affected by the policies and decisions made by an organization
Stakeholders include:
-Consumers
-Marketing intermediaries
-Stockholders
-Employees
Economics - ANSWER-the study of how wealth (anything of value) is created and
distributed
Microeconomics - ANSWER-the study of the decisions made by individuals and
businesses
Macroeconomics - ANSWER-the study of the national and global economies
Factors of production - ANSWER-the resources used to produce goods and services
Land and natural resources—elements that can be used in the production process
Labor—time and effort used to produce goods and services
Capital—money, facilities, equipment, and machines used in the operation of
organizations
Entrepreneurship—activity that organizes land and natural resources, labor, and
capital
Entrepreneur - ANSWER-a person who risks his or her time, effort, and money to
start and operate a business
Economy - ANSWER-the system through which a society creates and distributes
wealth
Capitalism - ANSWER-an economic system in which individuals own and operate
the majority of businesses that provide goods and services
Invisible hand - ANSWER-a term created by Adam Smith to describe how an
individual's own personal gain benefits others and a nation's economy
Laissez-faire - ANSWER-Implies that there should be no government interference in
the economy
Loosely translated, this term means "let them do" (as they see fit).
Is based on the concept of a market economy
, market economy - ANSWER-an economic system in which:
Businesses and individuals decide what to produce and buy
The market determines prices and quantities sold
mixed economy - ANSWER-one that exhibits elements of both capitalism and
socialism
Consumer products - ANSWER-goods and services purchased by individuals for
personal consumption
Businesses: - ANSWER-Produce goods and services to exchange for revenues
(money)
Use revenues to purchase factors of production
Households - ANSWER-Consume goods and services
Government - ANSWER-Provides public services in exchange for taxes
command economy - ANSWER-an economic system in which the government
decides:
What goods and services will be produced
How they will be produced
For whom available goods and services will be produced
Who owns and controls the major factors of production
Today, two types of economic systems serve as examples of command economies: -
ANSWER-Socialism & Communism
Socialism Government: - ANSWER-Decides what will be produced, how it will be
produced, and who owns and controls the factors
of production
Owns and controls key industries
Workers may choose their own occupations
Goal is to equally distribute income, eliminate poverty, provide social services, and
eliminate economic waste
Small-scale private businesses may be permitted
Communism Government - ANSWER-Owns and controls all factors of production
Plans production to meet the needs of the state
Dictates occupations, wages, and prices
The goal is to create a classless society where all contribute according to their ability
and receive benefits according to their needs
No private businesses are allowed
Productivity - ANSWER-The average level of output per worker per hour
Gross Domestic Product (GDP) - ANSWER-The total value of all goods and services
produced by all people within the boundaries of a country during a one-year period
Inflation - ANSWER-a general rise in the level of prices
