Fundamentals of Economics and Business - Unit 1

Unit 1: Fundamentals of Economics and Business

• Demand and Supply:
  • Law of Demand: Price increase, demand decrease. Price decrease, demand increase.
  • Law of Supply: Price increase, supply increase. Price decrease, supply decrease.
  • Changes in Market Equilibrium:
    • Increased supply leads to a decreased price and an increased quantity.
    • Decreased supply leads to an increased price and a decreased quantity.
    • Increased demand leads to an increased price and a quantity.
    • Decreased demand leads to a decreased price and quantity.
• Shifts in Demand and Supply:
  • Demand shifts affected by population, income, future expectations (like Black Friday).
  • Supply shifts depend on cost of materials, future expectations, number of producers, technology, and weather.
• Business Ownership:
  • Different types exist (sole proprietorship, partnership, public corporation, private corporation, franchise). Each type has its own set of pros and cons.
• Management Styles: Various management styles exist (Laissez-faire, autocratic, democratic).
• International Trade:
  • Reasons for International Business: Access to more global markets for goods, cheaper labor, increased quality/quantity, unique resources, and lower production costs.
  • Five Ps: Product, price, proximity, preference, and promotion are key for understanding global trade transactions.
  • Costs of International Business: Includes offshore outsourcing, labor issues (like child labor), environmental degradation, and the complexities of shipping.
  • Barriers to International Trade: Tariffs (taxes on imports), prohibitions, safety checks, permit requirements, and licensing can affect international trade costs.
  • Cost considerations: Cost of storage, marketing, shipping, overhead and profit margins, all factors in international costs of buying/selling.
  • Taxes: Tariffs are taxes on imports, and excise taxes are levied to reduce consumption (ex. gas, cigarettes).
  • Currency Fluctuations: Currency conversions influence pricing during international trade.

Unit 2: Marketing and Business Decisions

• Marketing:
  • 4Ps of marketing: Product, price, place, promotion.
  • 2Cs: Consumer and competition.
• Market Analysis:
  • Market Share: The portion of the market a company holds.
  • Types of Competition: Direct (same product) and indirect (different products targeting same consumers).
  • Market Segmentation: Demographic (observable data like age and income), psychographic (personality and values), geographic (location).
  • Data Collection: Primary (surveys, interviews) & secondary (research from others).
  • Channels of Distribution: Direct (producer to consumer), indirect (producer to wholesaler to retailer to consumer), speciality channels (vending machines, catalogs).
• Advertising and Branding:
  • Product Life Cycle: Introduction, growth, maturity, decline, and decision points.
  • Advertising Stages: Attention, interest, desire, action.
  • Branding Benefits: Builds loyalty, enhances value, attracts better employees, fosters credibility, garners positive publicity, and supports competitive differentiation.
• Trade Balances:
  • Trade Deficit: Imports greater than exports.
  • Trade Surplus: Exports greater than imports.

Unit 3: Business Planning, Finance and Accounting

• Venture Evaluation:
  • Key Considerations: Feasibility, financing, location, licenses, permit requirements, suppliers, personnel, marketability, competition, pricing strategies, expected profitability.
• Entrepreneurship:
  • Characteristics: Risk-taking, perceptiveness, curiosity, imagination, persistence, goal-setting, hard work, self-confidence, adaptability, independence.
  • Types of Entrepreneurship: Normal, lifestyle, technological, social, and corporate.
• Inventions and Innovations: Distinction between inventions (new products) and innovations (improvements).
• Pricing Strategies: Explore penetration pricing (low introductory price) and competitive pricing (matching competitors' prices).
• Financial Concepts:
  • Simple Interest: Principal + (Principal x Rate x Time).
  • Compound Interest: A = P(1 + R)^t
• Financial Planning: RESP (Registered Education Savings Plan), RRSP (Registered Retirement Savings Plan), TFSA (Tax-Free Savings Account).

Unit 1: Accounting Basics

• Financial Statements:
  • Balance Sheet: Lists assets, liabilities, and owner's equity. Includes company name, type of statement, date.
    • Assets: Ordered from most to least liquid (cash first).
    • Liabilities: Ordered by maturity date (short-term to long-term).
  • Income Statement: Reports revenues and expenses over a period (e.g., month ended). Includes company name, type of statement, date, and monthly period.
    • Revenue: Sales followed by the total revenue.
    • COGS (Cost of Goods Sold): Subtracted from revenue to calculate gross income.
    • Expenses: Listed individually with a total expenses to calculate net incomes or net loss.
    • Net Income/Net Loss: Difference between total revenue and total expenses. Gross profit = selling price-cost of good.

This quiz covers the key concepts from Unit 1 of Fundamentals of Economics and Business. Learn about the laws of demand and supply, market equilibrium, and factors affecting shifts in demand and supply. Additionally, explore various types of business ownership.