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TEST ONE STUDY GUIDE - Business An organization that...

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Business: An organization that provides goods or services that are then sold to earn profit. Profits: The difference between a business’s revenues and its expenses. The rewards owners get for risking their money and time. The Benefits of business: Provides goods and services Employment of workers Innovation and opportunities Increased quality of life and standard of living Enhance personal incomes of owners and stockholders Tax payments support government Support for charities and community leadership Types of Economic systems: ECONOMIC SYSTEM A nation’s system for allocating its resources among its citizens, both individuals and organizations. FACTORS OF PRODUCTION Labor: Human resource Capital: Financial resource Entrepreneurs: Persons who risk starting a business Physical resources: Tangible things used to conduct business. Information resources: Data and other information. PLANNED ECONOMY A centralized government controls all or most factors of production and makes all or most production and allocation decision for the economy.
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MARKET ECONOMY Individual producers and consumers control production and allocation by creating combinations of supply and demand. MARKET A mechanism of exchange between buyers and sellers of a good or service. Mixed Market Economy (SUCH AS U.S.A.) Featured characteristics of both planned and market economies. PRIVATIZATION: The process of converting government enterprises into privately owned companies.
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