Business Science Study Guide
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Questions and Answers

Which economic system is characterized by barter and minimal government intervention?

  • Command Economic System
  • Traditional Economic System (correct)
  • Free Market Economic System
  • Mixed Economic System

    • In a free market economic system, the government plays a significant role in determining prices.

    False

    Name the four types of economic systems.

    Traditional, Free Market, Command, Mixed

    A __________ economic system involves government control over production and distribution.

    <p>Command</p> Signup and view all the answers

    Match the following economic systems with their characteristics:

    <p>Traditional Economic System = Based on customs and is resistant to change Free Market Economic System = Prices fluctuate based on supply and demand Command Economic System = Controlled by the government and public ownership Mixed Economic System = Combines elements of free market and command systems</p> Signup and view all the answers

    What is the second stage of an economic cycle?

    <p>Recession</p> Signup and view all the answers

    During the recovery phase, economic activity begins to decline.

    <p>False</p> Signup and view all the answers

    What characterizes a depression in the economic cycle?

    <p>Persistent GDP decline, high unemployment, and low consumer spending</p> Signup and view all the answers

    Which classification of business involves services like retail, healthcare, and banking?

    <p>Tertiary Industry</p> Signup and view all the answers

    A private company's ownership is open to the general public.

    <p>False</p> Signup and view all the answers

    What is the primary purpose of a business?

    <p>To provide goods and services to society and make a profit.</p> Signup and view all the answers

    The total value of all outstanding shares of a public company is called ______.

    <p>market capitalization</p> Signup and view all the answers

    What is a key characteristic of a sole trader?

    <p>One person owns and runs the business</p> Signup and view all the answers

    Match the following types of legal structures with their descriptions:

    <p>Sole Trader = Owned and run by one person, personally responsible for debts Partnership = Two or more people sharing profits and responsibilities Public Company = Shares listed on the stock market Franchise = Business model granting rights to sell a product/service</p> Signup and view all the answers

    Businesses only have a financial impact and do not contribute to social aspects of communities.

    <p>False</p> Signup and view all the answers

    Name one advantage of a State-Owned company.

    <p>Provides essential services to the community.</p> Signup and view all the answers

    What does Market Capitalization equal?

    <p>Total number of Outstanding Shares X Current Market Price per Share</p> Signup and view all the answers

    Aims are the specific measurable outcomes a business aims to achieve.

    <p>False</p> Signup and view all the answers

    What is the prime function of Sierra Nevada?

    <p>Providing education</p> Signup and view all the answers

    The study of how societies allocate their scarce resources is known as __________.

    <p>economics</p> Signup and view all the answers

    Match the following terms to their definitions:

    <p>Goal = What a business wants to achieve Objective = Measurable outcomes a business aims for Aim = Broad goals of a business Mission Statement = Main purpose and goals of a business</p> Signup and view all the answers

    Which of the following is an external business environment factor?

    <p>Global economic trends</p> Signup and view all the answers

    Which of the following best describes the difference between needs and wants?

    <p>Needs are essential for survival, and wants are not essential.</p> Signup and view all the answers

    Microeconomics analyzes the economy as a whole, focusing on inflation and GDP growth.

    <p>False</p> Signup and view all the answers

    Inflation refers to an increase in purchasing power.

    <p>False</p> Signup and view all the answers

    What does CPI stand for?

    <p>Consumer Price Index</p> Signup and view all the answers

    What are the two types of economy discussed?

    <p>Microeconomy and Macroeconomy</p> Signup and view all the answers

    GDP stands for __________.

    <p>Gross Domestic Product</p> Signup and view all the answers

    What happens to the quantity demanded as prices increase?

    <p>The quantity demanded decreases.</p> Signup and view all the answers

    The law of supply states that as prices increase, the quantity supplied will decrease.

    <p>False</p> Signup and view all the answers

    What defines an economic system?

    <p>Allocation of resources and organization of economic activity.</p> Signup and view all the answers

    Which economic system is characterized by limited specialization and is resistant to change?

    <p>Traditional Economic System</p> Signup and view all the answers

    What defines a Free Market Economic System?

    <p>Competition exists among businesses with private ownership.</p> Signup and view all the answers

    Which scenario can lead an economy into a depression?

    <p>Sustained decline in GDP for over six months.</p> Signup and view all the answers

    In which economic system does the government own and control the means of production?

    <p>Command Economic System</p> Signup and view all the answers

    What is the main feature of a mixed economic system?

    <p>A combination of free market and command economy elements.</p> Signup and view all the answers

    During which stage of the economic cycle does GDP reach its highest point?

    <p>Prosperity</p> Signup and view all the answers

    What occurs during the recovery stage of the economic cycle?

    <p>Economic activity starts to rebound.</p> Signup and view all the answers

    Which of the following options is NOT a characteristic of a Command Economic System?

    <p>Prices are set by supply and demand.</p> Signup and view all the answers

    What is considered a primary industry?

    <p>Farming and mining</p> Signup and view all the answers

    Which type of business structure is characterized by limited liability to its shareholders?

    <p>Private company</p> Signup and view all the answers

    In which category do businesses like fast food chains typically fall?

    <p>Franchise</p> Signup and view all the answers

    How do tertiary industries primarily contribute to the economy?

    <p>By providing services</p> Signup and view all the answers

    What is the main purpose of businesses in society?

    <p>To generate employment and economic growth</p> Signup and view all the answers

    Which of the following is a characteristic of a public company?

    <p>Shares are listed on the stock market</p> Signup and view all the answers

    What distinguishes a sole trader from a partnership?

    <p>Partnerships require a legal contract</p> Signup and view all the answers

    How is market capitalization defined?

    <p>The total value of all outstanding shares of a public company</p> Signup and view all the answers

    What primary function does Sierra Nevada serve?

    <p>Offering education</p> Signup and view all the answers

    How are objectives defined in a business context?

    <p>Specific and measurable outcomes the business aims for</p> Signup and view all the answers

    Which of the following best describes external business environments?

    <p>Factors outside a company's direct control that can impact its strategy</p> Signup and view all the answers

    What is the ultimate aim of a business?

    <p>Achieving broad goals like profitability</p> Signup and view all the answers

    Which of the following factors is primarily studied in macroeconomics?

    <p>Unemployment rates across a nation</p> Signup and view all the answers

    What does a company's mission statement typically convey?

    <p>The unique aspects that differentiate it from competitors</p> Signup and view all the answers

    Which concept does microeconomics specifically focus on?

    <p>The allocation of resources among individual units like households</p> Signup and view all the answers

    What distinguishes needs from wants?

    <p>Needs must be met for survival; wants are desires that enhance life quality.</p> Signup and view all the answers

    How is market capitalization calculated?

    <p>Total number of outstanding shares times current market price per share</p> Signup and view all the answers

    How does inflation affect purchasing power?

    <p>Inflation decreases purchasing power as prices rise.</p> Signup and view all the answers

    What does CPI measure?

    <p>The average change over time in prices paid by consumers.</p> Signup and view all the answers

    What indicates economic growth?

    <p>An increasing GDP over a specific period indicates economic growth.</p> Signup and view all the answers

    What does the law of supply and demand describe?

    <p>The balance between the amount producers offer and consumer willingness to buy.</p> Signup and view all the answers

    What happens to quantity demanded when prices increase?

    <p>Quantity demanded decreases due to the inverse relationship.</p> Signup and view all the answers

    What characterizes an economic system?

    <p>It determines resource allocation and economic activity organization.</p> Signup and view all the answers

    What is the relationship between supply and price?

    <p>As price increases, supply typically increases.</p> Signup and view all the answers

    Study Notes

    Business Science Study Guide

    • A business is an organization that provides goods and services to society to make a profit.

    • Businesses are categorized by industry sector, legal structure, and size.

    • Industry Sectors:

      • Primary: Extracts natural resources (farming, mining, fishing)
      • Secondary: Transforms raw materials into finished goods (manufacturing, construction)
      • Tertiary: Provides services (retail, healthcare, banking, education)

    • Businesses are important because they:

      • Create jobs and wealth, leading to economic growth
      • Develop new products and services, fostering innovation
      • Contribute to communities and have a social impact

    • Legal Structures:

      • Sole trader: Owned by one person, owner is personally responsible for debts
      • Partnership: Two or more people share profits and are jointly responsible for debts; typically in professions like law, accounting, and medicine.
      • Private company: Ownership limited to approved shareholders; popular for family businesses seeking control.
      • Public company: Shares listed on the stock market, accessed by a broader range of investors.
      • Franchise: Business model where a franchisor grants a franchisee the right to sell its product/service.
      • State-owned company: Owned and controlled by the government; provides essential services.

    • Market Capitalization (Market Cap): Total value of all outstanding shares (number of shares x current market price per share)

    • Goals: Specific, distinct purposes of a business, for example, increasing student numbers.

    • Aims: Broad goals, for example, making a profit.

    • Objectives: Measurable outcomes a business strives to achieve, for example, number of students in 2024 compared to 2023.

    • Mission Statement: Statement of a company's purpose and goals.

    • Prime Function: The main activity of a business.

    • Economics: The social science of how societies allocate scarce resources to fulfill unlimited needs & wants.

    • External Business Environments: Factors outside a company's direct control that affect operations, performance, and strategies (political, economic, social, technological, ethical)

    • Microeconomics: Examines individual economic units (households, firms, industries); focuses on resource allocation, production, and consumption.

    • Macroeconomics: Studies the overall economy, considering factors like inflation, unemployment, GDP growth, interest rates, and consumer spending.

    • Needs: Essential items for survival (food, water, shelter)

    • Wants: Desires that enhance quality of life, influenced by personal preferences.

    • Inflation Rate: The rate at which the level of prices for goods and services increases over a period of time.

    • CPI (Consumer Price Index): Measurement of average change in consumer goods prices over time, used to assess inflation.

    • GDP (Gross Domestic Product): Total value of all goods and services produced in a country.

    • Demand: Quantity of goods/services consumers are willing to buy at specific prices.

    • Supply: Quantity of goods/services producers are willing to provide at specific prices

    • Law of Supply and Demand: Relationship between supply and demand, determining equilibrium price

    • Economic Systems: Method by which resources are allocated & wealth is created.

      • Traditional: Based on custom and tradition, resistance to change.
      • Free Market: Based on competition & prices set by supply/demand.
      • Command: Centrally planned by government.
      • Mixed: Combines free market & command principles.

    • Stages of Economic Cycle:

      • Prosperity
      • Recession
      • Depression
      • Recovery

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    Related Documents

    Study Guide GAC 012 Units 1 & 2 PDF

    Description

    Explore the fundamentals of business science including the various industry sectors, legal structures, and the vital role businesses play in the economy. This study guide covers essential concepts such as job creation, innovation, and community contribution. Perfect for students looking to understand the basics of business.

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