Saylor Academy BUS101 Exam Questios with 100% correct Answers

Saylor Academy BUS101 Exam Questios with 100% correct Answers Social Benefit - answerThe total benefit to society from producing or consuming a good or service. Social benefit includes all the private benefits plus any external benefits of production / consumption. If a good has significant external benefits, then the social benefit will be greater than the private benefit. Contract Theory - answerThe belief that business is a community of participants organized around a common purpose. These participants have legitimate interests in how the business is conducted and, therefore, they have legitimate rights over its affairs. Most contract theorists see the enterprise being run by employees and managers as a kind of representative democracy. Stakeholder Theory - answerThe purpose of a business is to create as much value as possible for stakeholders. In order to succeed and be sustainable over time, executives must keep the interests of customers, suppliers, employees, communities and shareholders aligned and going in the same direction. Unemployed - answerPeople are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work. Milton Friedman - answerThe main purpose of a business is to maximize profits for its owners, and in the case of a publicly-traded company, the stockholders are its owners. Corporate Social Responsibility (CSR) - answerThe belief that sustainable financial returns are not possible without taking into account the aspirations and interests of other stakeholders such as customers, employees, society and the environment; highlights the fact that business, consumers and society are part of a shared ecosystem, and that the long-term health of this ecosystem must be maintained above all else. Innovation as a goal - answerThe belief that business can be viewed to exist for the purpose of creative expansion. Successful firms like Google manage to align their activities towards the purpose of creative expansion from the perspective of all stakeholders, especially employees. This also validates the growing importance of innovation as a core principle for corporation survival and success. Business cycle - answerHas four stages: prosperity, recession, depression, and recovery. The business cycle starts from a TROUGH (lower point) and passes through a RECOVERY phase followed by a period of expansion (upper turning point) and PROSPERITY. After the PEAK point is reached there is a declining phase of RECESSION followed by a DEPRESSION. Prosperity - answerHighest level of the recovery phase of the business cycle. Marked by an expansion of output, income, employment, prices and profits, a rise in the standard of living, rising interest rates, inflation, and a large expansion of bank credit. Due to a high level of economic activity, it causes a rise in prices and profits. There is an upswing in the economic activity and economy reaches its PEAK. Recession - answerWhen a broad range of economic indicators falls for at least 6 months; the turning point from prosperity to depression. Economic activities slow down and demand starts falling. There is a steady decline in output, income, employment, prices and profits. Businessmen lose confidence and become pessimistic. Investment is reduced and bank credit contracts. Business expansion stops, stock market falls, orders are cancelled, and people start losing their jobs. The increase in unemployment causes a sharp decline in income and demand. Generally, recession lasts for a short period. Depression - answerDepression sets in when there is a continuous decrease of output, income, employment, prices and profits causing a fall in the standard of living. Marked by a fall in income, decline in consumption and demand, rise in unemployment, fall in interest rates, contraction of bank credit and overall business pessimism. Economic activity is at the lowest, and prices and profits decline until the economy reaches its TROUGH (low point) Recovery - answerThe turning point from depression to prosperity. Marked by a rise in economic activity. There is a steady rise in demand, output, production, employment, and income. Prices and profits increase. Businesses become optimistic. Investments increase. Banks expand credit, business expansion takes place and stock markets are activated. Recovery slowly emerges into prosperity, and the business cy