SOM 122 MIDTERM REVIEW
Business - Answers - organization that provides goods or services for a profit
external environment - Answers - everything outside a business's boundaries that may
affect it
domestic business environment - Answers - in which firm operates and obtains
revenues; close relationship with suppliers & customers; distinguished from competitors
global business environment - Answers - international forces affecting business
including trade, economy, political unrest, suppliers, cultures, competitors, currency
Technological environment - Answers - all ways firms create values for themselves;
knowledge, methods, equipment, systems
political-legal environment - Answers - business/gov't relationship; regulation, cans and
cannots
sociocultural environment - Answers - customs, morals, values, characteristics.
Determines goods and services based on consumer taste
economic environmetn - Answers - conditions of an economic system a business is
operating in
The Factors of Production - Answers - Labor, Capital, Entrepreneurs, Physical
Resources, Information Resources
labor - Answers - physical and mental capabilities of people producing
capital - Answers - financial resources to operate business
entrepreneurs - Answers - accept risks & opportunity in operating new business
ventures
physical resources - Answers - tangible things to conduct business
information resources - Answers - data and other stats used to conduct business;
market forecasts, knowledge, economic data
planned economy - Answers - centralized gov't controls production
communism - Answers - government owns and operates all production, people
assigned jobs, prices and wages set
, communist nations - Answers - North Korea, Vietnam, China
market - Answers - mechanism of exchange between buyers and sellers
capitalism - Answers - prices and products determined by supply and demand, freedom
of choice
mixed market economy - Answers - most realistic economy, some regulation on things
such as who can and cannot buy alcohol. also pertain government bailouts on occasion
privatization - Answers - process of turning gov't owned firms into private companies
socialism - Answers - gov't owns select industries (banking, transport, oil) and smaller
businesses are privately owned
law of demand - Answers - buyers will purchase more as price drops, and less as price
rises
law of supply - Answers - producers offer more of a product as price rises, less as price
decreases
demand and supply schedule - Answers - relationship of s&d at multiple price levels
surplus - Answers - quantity supplied> quant demanded
shortage - Answers - quant supplied < quant demanded
private enterprise - Answers - individuals pursue wants with little gov't restriction. private
property rights, freedom of choice, profits, competition
perfect competition - Answers - large number of small firms with identical products.
known prices. easy to enter and leave market. prices accepted and set by s&d. Ex: USA
agriculture
monopolistic competition - Answers - numerous sellers differentiating through brands.
fewer competitors but still a lot, entering and leaving is easy. more control over price.
Ex: Coke & Pepsi
oligopoly - Answers - handful of large sellers, hard to enter, control over strategies and
price. Ex: steel, auto, airline
monopoly - Answers - one producer/seller, complete control of price. Illegal in USA but
there are fixed prices on natural ________. Ex: electric companies
business cycle - Answers - short term cycle of economic expansion and contraction
Business - Answers - organization that provides goods or services for a profit
external environment - Answers - everything outside a business's boundaries that may
affect it
domestic business environment - Answers - in which firm operates and obtains
revenues; close relationship with suppliers & customers; distinguished from competitors
global business environment - Answers - international forces affecting business
including trade, economy, political unrest, suppliers, cultures, competitors, currency
Technological environment - Answers - all ways firms create values for themselves;
knowledge, methods, equipment, systems
political-legal environment - Answers - business/gov't relationship; regulation, cans and
cannots
sociocultural environment - Answers - customs, morals, values, characteristics.
Determines goods and services based on consumer taste
economic environmetn - Answers - conditions of an economic system a business is
operating in
The Factors of Production - Answers - Labor, Capital, Entrepreneurs, Physical
Resources, Information Resources
labor - Answers - physical and mental capabilities of people producing
capital - Answers - financial resources to operate business
entrepreneurs - Answers - accept risks & opportunity in operating new business
ventures
physical resources - Answers - tangible things to conduct business
information resources - Answers - data and other stats used to conduct business;
market forecasts, knowledge, economic data
planned economy - Answers - centralized gov't controls production
communism - Answers - government owns and operates all production, people
assigned jobs, prices and wages set
, communist nations - Answers - North Korea, Vietnam, China
market - Answers - mechanism of exchange between buyers and sellers
capitalism - Answers - prices and products determined by supply and demand, freedom
of choice
mixed market economy - Answers - most realistic economy, some regulation on things
such as who can and cannot buy alcohol. also pertain government bailouts on occasion
privatization - Answers - process of turning gov't owned firms into private companies
socialism - Answers - gov't owns select industries (banking, transport, oil) and smaller
businesses are privately owned
law of demand - Answers - buyers will purchase more as price drops, and less as price
rises
law of supply - Answers - producers offer more of a product as price rises, less as price
decreases
demand and supply schedule - Answers - relationship of s&d at multiple price levels
surplus - Answers - quantity supplied> quant demanded
shortage - Answers - quant supplied < quant demanded
private enterprise - Answers - individuals pursue wants with little gov't restriction. private
property rights, freedom of choice, profits, competition
perfect competition - Answers - large number of small firms with identical products.
known prices. easy to enter and leave market. prices accepted and set by s&d. Ex: USA
agriculture
monopolistic competition - Answers - numerous sellers differentiating through brands.
fewer competitors but still a lot, entering and leaving is easy. more control over price.
Ex: Coke & Pepsi
oligopoly - Answers - handful of large sellers, hard to enter, control over strategies and
price. Ex: steel, auto, airline
monopoly - Answers - one producer/seller, complete control of price. Illegal in USA but
there are fixed prices on natural ________. Ex: electric companies
business cycle - Answers - short term cycle of economic expansion and contraction
