BUS 101 Qustions and Answers
Business - ANSWERSOrganization that provides goods or services for profit
Profit - ANSWERSdifferences between a business's revenues and its expenses
External Environment - ANSWERSeverything outside an organization's boundaries that might
affect it
Economic System - ANSWERSa nation's system for allocating its resources among citizens
Factors of production - ANSWERSresources used in the production of goods and services- labor,
capital, entrepreneurs, physical resources and information resources
Labor (human resources) - ANSWERSphysical and mental capabilities of people as they
contribute to economic production
Capital - ANSWERSfunds needed to create and operate a business enterprise
Entrepreneur - ANSWERSindividual who accepts the risks and opportunities involved in creating
and operating a new business venture
Planned economy - ANSWERSeconomy 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 - ANSWERSpolitical system in which the government owns and operates all factors
of production
,Market economy - ANSWERSeconomy in which individuals control production and allocation
decisions through supply and demand
Market - ANSWERSmechanism for exchange between buyers and sellers of a particular good or
service
Capitalism - ANSWERSsystem that sanctions the private ownership of the factors of production
and encourages entrepreneurship by offering profits as an incentive
Privatization - ANSWERSprocess of converting government enterprises into privately owned
companies
Socialism - ANSWERSplanned economic system in which the government owns and operates
only selected major sources of production
Demand - ANSWERSthe willingness and ability of buyers to purchase a good or service
Supply - ANSWERSthe willingness and ability of producers to offer a good or service for sale
Private enterprise - ANSWERSeconomic system that allows individuals to pursue their own
interests without undue governmental restriction
Competition - ANSWERSvying among businesses for the same resources or customers
Perfect competition - ANSWERSmarket or industry characterized by numerous small firms
producing an identical product
Monopolistic competition - ANSWERSmarket or industry characterized by numerous buyers and
relatively numerous sellers trying to differentiate their products from those of competitors
, Monopoly - ANSWERSmarket or industry in which there is only one producer that can therefore
set the prices on all of its products
Natural monopoly - ANSWERSindustry in which one company can most efficiently supply all
needed goods or services
Standard of living - ANSWERSthe total quantity and quality of goods and services people can
purchase with the currency used in their economic system
Gross Domestic Product (GDP) - ANSWERStotal value of all goods and services produced within
a given period by a national economy through domestic factors of production
Gross National Product (GNP) - ANSWERStotal 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 - ANSWERSgross domestic product (GDP) adjusted to account for changes in currency
values and price changes
Purchasing Power Party - ANSWERSthe principal that exchange rates are set so that the prices of
similar products in different countries are about the same
Inflation - ANSWERSoccurs when widespread price increases occur throughout an economic
system
Unemployment - ANSWERSthe level of joblessness among people actively seeking work in an
economic system
Business - ANSWERSOrganization that provides goods or services for profit
Profit - ANSWERSdifferences between a business's revenues and its expenses
External Environment - ANSWERSeverything outside an organization's boundaries that might
affect it
Economic System - ANSWERSa nation's system for allocating its resources among citizens
Factors of production - ANSWERSresources used in the production of goods and services- labor,
capital, entrepreneurs, physical resources and information resources
Labor (human resources) - ANSWERSphysical and mental capabilities of people as they
contribute to economic production
Capital - ANSWERSfunds needed to create and operate a business enterprise
Entrepreneur - ANSWERSindividual who accepts the risks and opportunities involved in creating
and operating a new business venture
Planned economy - ANSWERSeconomy 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 - ANSWERSpolitical system in which the government owns and operates all factors
of production
,Market economy - ANSWERSeconomy in which individuals control production and allocation
decisions through supply and demand
Market - ANSWERSmechanism for exchange between buyers and sellers of a particular good or
service
Capitalism - ANSWERSsystem that sanctions the private ownership of the factors of production
and encourages entrepreneurship by offering profits as an incentive
Privatization - ANSWERSprocess of converting government enterprises into privately owned
companies
Socialism - ANSWERSplanned economic system in which the government owns and operates
only selected major sources of production
Demand - ANSWERSthe willingness and ability of buyers to purchase a good or service
Supply - ANSWERSthe willingness and ability of producers to offer a good or service for sale
Private enterprise - ANSWERSeconomic system that allows individuals to pursue their own
interests without undue governmental restriction
Competition - ANSWERSvying among businesses for the same resources or customers
Perfect competition - ANSWERSmarket or industry characterized by numerous small firms
producing an identical product
Monopolistic competition - ANSWERSmarket or industry characterized by numerous buyers and
relatively numerous sellers trying to differentiate their products from those of competitors
, Monopoly - ANSWERSmarket or industry in which there is only one producer that can therefore
set the prices on all of its products
Natural monopoly - ANSWERSindustry in which one company can most efficiently supply all
needed goods or services
Standard of living - ANSWERSthe total quantity and quality of goods and services people can
purchase with the currency used in their economic system
Gross Domestic Product (GDP) - ANSWERStotal value of all goods and services produced within
a given period by a national economy through domestic factors of production
Gross National Product (GNP) - ANSWERStotal 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 - ANSWERSgross domestic product (GDP) adjusted to account for changes in currency
values and price changes
Purchasing Power Party - ANSWERSthe principal that exchange rates are set so that the prices of
similar products in different countries are about the same
Inflation - ANSWERSoccurs when widespread price increases occur throughout an economic
system
Unemployment - ANSWERSthe level of joblessness among people actively seeking work in an
economic system
