400midterm.docx - 1.1 1 The difference between a business's...

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1.1 1. The difference between a business's revenues and its expenses is known as its profits 2. Information systems, electronics, and telecommunications would be regarded as part of the technological environment. 3. The technological environment of a company includes the various ways it creates value, including human knowledge, work methods, physical equipment, electronics and telecommunications, and processing systems. 4. One of the benefits of a healthy business environment is an increased standard of living 5. During the recent recession, many people were looking for jobs and companies were able to hire employees for a lower wage. This is an example of how the economic environment can affect business. 6. Profit plays a huge role in encouraging people to risk their money and time to open and expand businesses. 1.2 1. The factor of production that in cludes the physical and intellectual contributions people make while engaged in economic production is known as labor 2. The economic system in which the government owns and operates all factors of production and makes all business decisions is known as communism 3. A(n) economic system is a nation's method for allocating its resources among citizens and organizations. 4. Which factor of production includes physical and intellectual contributions made during production? Labor 5. Socialism and communism are examples of a planned economy. 6.John owns a restaurant and business is so good that he is thinking about enlarging his building so he can accommodate more customers. John is operating in a market economy. 1.3 1. The market (or equilibrium price) is the price at which the quantity of goods demanded and quantity supplied are equal. 2. In an oligopoly, there are generally only a few large suppliers or sellers of a product or service. 3. According to the law of supply, producers offer more product for sale as prices rise and less as prices fall. 4.The equilibrium price is where the amount of goods demanded and the quantity of goods supplied are the same. 5. Consumers in a certain county are only provided one option for electric service; they have no choice but to use the one company in the area. This is an example of a monopoly 6. Perfect competition occurs when many companies offer similar products and prices are set exclusively by supply and demand. 1.4 1. The pattern of expansions and contractions in a nation's economic system is referred to as the business cycle . 2. A country's balance of trade is the economic value of all of its exports less the economic value of all of its imports. 3.The aggregate output is the total quantity of goods and services produced by an economic system within a specific period of time. 4. If GDP (gross domestic product) is rising, the country is likely experiencing economic growth .
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