Business Functions and Economics Principles

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Questions and Answers

Which of the following is NOT one of the five essential functions of a business?

Research (correct)

Marketing

Management

Finance

In a socialist economy, prices are typically determined by supply and demand.

False

What are the three key economic questions every society must answer?

What to produce, how to produce, for whom to produce

The total value of goods and services produced within a country is referred to as ______.

GDP Signup and view all the answers

Match the following economic systems with their characteristics:

Capitalism = Minimal government intervention Socialism = High levels of government planning Signup and view all the answers

Which of the following is a disadvantage of capitalism?

Market failures Signup and view all the answers

Perfect competition involves many sellers offering identical products, allowing one seller to influence the price.

False Signup and view all the answers

What is the equilibrium price?

The price at which quantity supplied equals quantity demanded Signup and view all the answers

Which of the following best describes the unemployment rate?

The percentage of the labor force without jobs. Signup and view all the answers

Entrepreneurs and lifestyle business owners both prioritize growth and innovation.

False Signup and view all the answers

What is the primary advantage of a corporation?

Limited liability and access to capital. Signup and view all the answers

The four elements of negligence are duty of care, breach of duty, ______, and damages.

causation Signup and view all the answers

Match the following management functions with their descriptions:

Planning = Setting objectives and determining a course of action. Organizing = Allocating resources and assigning tasks. Leading = Influencing and motivating employees. Controlling = Monitoring performance and making adjustments. Signup and view all the answers

Which of the following is NOT a step in resolving ethical dilemmas?

Ignore Signup and view all the answers

A Sole Proprietorship has unlimited liability for its owner.

True Signup and view all the answers

What are the criteria used to determine a FICO credit score?

Payment history, amounts owed, credit history length, credit mix, new credit. Signup and view all the answers

A lifestyle business focuses on ______ rather than growth.

maintaining a particular lifestyle Signup and view all the answers

Which of the following defines a job description?

A detailed account of duties and responsibilities. Signup and view all the answers

Study Notes

Five Essential Business Functions

Businesses have five key functions: management, operations, marketing, accounting, and finance.
Management involves directing resources through planning, organizing, leading, and controlling.
Operations focus on efficiently producing goods or services.
Marketing promotes and sells products or services.
Accounting tracks financial transactions.
Finance manages money and investments.

Economics Principles

Economics studies how societies allocate scarce resources to satisfy unlimited needs.
Key economic questions include: what to produce, how to produce, and for whom to produce.
Capitalism relies on private property, supply-and-demand pricing, and minimal government intervention.
Socialism involves government or collective ownership, often with controlled pricing and significant economic planning.
Capitalism strengths include innovation, efficiency, and consumer choice, while weaknesses include inequality and market failures.
Socialism strengths include reduced inequality and social welfare, while weaknesses can be inefficient resource use and lack of incentives.

Perfect Competition and Supply/Demand

Perfect competition exists where many sellers with identical products have no significant influence on price.
Supply represents the quantity producers are willing to sell.
Demand reflects the quantity consumers are willing to purchase.
Equilibrium price occurs where quantity supplied matches quantity demanded.
Supply and demand interact, leading to price adjustments to reach equilibrium.

Measuring Economic Health

Key indicators of economic health include GDP, unemployment rate, inflation rate, CPI, and consumer spending.
Key goals for an economy include economic growth, full employment, and stable prices.
GDP (Gross Domestic Product) measures the total value of goods and services a country produces.
Recession is a period of declining economic activity.
Full employment means all those wishing to work have employment.
Unemployment rate is the percentage of the workforce without jobs.
CPI (Consumer Price Index) measures the cost of a basket of consumer goods and services.

Entrepreneurship

Entrepreneurship involves innovation, risk-taking, and resource management.
Lifestyle businesses prioritize maintaining a lifestyle rather than growth.
Entrepreneurs aim for growth and innovation, while lifestyle business owners prioritize personal goals

Business Organizations

Sole Proprietorship: The owner and business are one entity, offering simple setup and full control. However, owners have unlimited liability and limited resources.
Partnerships: Shared ownership and liability.
General Partnerships share all liabilities.
Limited Partnerships limit liability to investment.
Partnerships combine resources and responsibilities but can involve conflicts and shared liabilities.
Corporations are separate legal entities from their owners, offering limited liability and access to capital but incurring double taxation and regulatory complexities.
Shareholders own company stock.
Stock represents ownership shares.
Board of Directors guides management.
Dividends are profit distributions to shareholders.
S Corporations and Limited Liability Companies (LLCs) offer limited liability and single taxation but have ownership restrictions (S Corps), or more flexible structures (LLCs).

Negligence and Contracts

Negligence has four elements: (1) duty of care; (2) breach of duty; (3) causation; and (4) damages.
A contract comprises four elements: (1) offer; (2) acceptance; (3) consideration; and (4) legality.

Ethics

Ethical dilemmas involve choosing between morally complex options.
Ethical decisions require choosing the morally correct actions.
Ethical lapses are actions against ethical standards.
Resolving ethical dilemmas involves: recognizing, analyzing, evaluating, deciding and reflecting.
Avoiding ethical lapses involves considering: legality, fairness, personal feelings, public perception, and alignment with personal values.

Management

Management's core functions include planning, organizing, leading, and controlling.

HRM (Human Resource Management)

HRM involves recruitment, training, performance management, compensation, and legal compliance.
Job descriptions note duties/responsibilities, while job specifications detail necessary qualifications and skills.

Personal Finance

Key factors influencing FICO scores include payment history, outstanding debt, credit history length, credit mix, and new credit activity.
Compound interest earns interest on both principal and accumulated interest.
Dave Ramsey's personal finance principles suggest budgeting, building an emergency fund, and paying down debt, followed by investment.

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Description

Explore the five essential business functions including management, operations, marketing, accounting, and finance. Additionally, dive into core principles of economics, examining topics such as capitalism and socialism, and understanding how societies manage resources.