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BUS101_topic1 - Topic 1 Introduction to Business and...

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Topic 1 - Introduction to Business and Economics What Is Business? Understanding business begins with grasping a few basic elements. First of all, what is business ? You can do business and you can open a business. Therefore, it's both an activity and an entity. Business aims to be profitable while providing needed goods and services (such as products ) to others. Profit is key here (although non-profit organizations, such as charities, have other primary goals instead of profit). Among profit-making ventures, the goal is to have money left over after all the costs of operating a business. The persons who decide to take the risk in starting and running a business are called entrepreneurs . Maybe you're thinking of becoming a successful entrepreneur? This course can help you toward that end. Business and Economics Success in business is related to economics , or how a society’s resources are used to create products. A society’s economic system can determine how this will be accomplished. There are various types of economic systems : communism, socialism, capitalism, and a mixed economy. Major Economic Systems Each system uses different techniques to fulfill an endless demand for products with a limited supply of resources. Let's learn more about each type of economic system before moving on. Communism - All businesses are owned and operated by the public as a whole, through the government, rather than individuals. The state makes almost all economic decisions and offers very limited freedom of religion, political activity, and job choice. Socialism - the public, via government, owns and operates basic industries like utilities, health care, banking, transportation, but individuals own and operate smaller businesses. State plans production and distribution of basic goods and services, but entrepreneurs follow consumer demands. Frequently democratic, state recognizes individual freedoms, but may restrict job choice. Capitalism - free enterprise, individuals own and operate most businesses that provide goods and services. Market forces determine what will be produced and distributed, and how. There is an emphasis on individual freedoms and entrepreneurship. Mixed Economy - combination of elements from more than one economic system, usually favoring one more than others. Most businesses are publicly owned, with some government regulation. Some allocation of resources is controlled by market, and some is controlled by government. There is an emphasis on balance between individual freedoms and equality. Although countries may tend to resemble one economic system more than another, there are no pure forms of communism, socialism, or capitalism in the world today. Most countries, such as the United States, have a mixed economy. In fact, the U.S. government is currently the largest employer in the U.S. However, in general, if the major means of allocating resources is through the free-market system, the economy type is considered to be capitalism.
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