Term
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Definition
Self-interested Behavior
Regulated by Competition
Laissez Faire - i.e. minimal government regulation |
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Term
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Definition
| GUPI- GDP, Unemployment, Productivity, Inflation |
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Term
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Definition
| Measures the goods and services produced by a country in a year |
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Term
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Definition
Measures population over 16yrs who are ACTIVELY looking for work
-Frictional- people in between jobs
- Cyclical- seasonal jobs
-Structural- people are laid off, mismatch in supply and demand for jobs |
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Term
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Definition
| Productivity= output per person per hour |
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Term
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Definition
Widespread increases in prices (too much money chasing the SAME amount of goods)
--Government tries to reduce inflation |
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Term
| Why Does the Government get involved in business? |
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Definition
1-Channeling markets along competitive lines
2-Equality vs. Efficiency
3-Market Failures – Externalities and Common Goods |
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Term
| Channeling markets along competitive lines |
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Definition
1) If competition is not monitored ⇒ anticompetitive behavior, collusion
2) Anti-Trust Activities- mergers/acquisitions
3) Natural Monopolies |
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Term
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Definition
-equality vs. fairness
-Egalitarian Ideas in politics but INEQUALITY in the end result/ Economic
system
-Right to Compete vs. Right to Succeed |
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Term
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Definition
| Externalities and Common Goods |
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Term
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Definition
-Private Costs- Everything a business owner has to pay to create their
product (rent, taxes, materials, etc.)
-Externalities or External Costs- Secondary effects from business, like
pollution
SOCIAL COSTS= Private Costs + Externalities= Total Costs/ALL Costs |
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Term
| Corporate Social Responsibility |
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Definition
Taking into account the interests of Stakeholders
Stakeholders= ANYONE impacted by the decisions and policies Of a company |
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Term
| Influence of Stakeholders |
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Definition
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Term
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Definition
| Quit, boycott, change brands, divest |
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Term
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Definition
| Protest, write letters, cause negative publicity |
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Term
| Enlightened Self Interest (ESR) |
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Definition
doing the right thing because it benefits you
-Not the same as ethics because of the MOTIVE |
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Term
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Definition
beliefs about what is right and wrong, good or bad in actions that
Affect others (beliefs that come from within) |
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Term
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Definition
The Law is an external guide, and ethics is an internal guide. The law
is limited and written in generalities and doesn’t cover ALL circumstances.
Laws can contradict your own ethics. |
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Term
| Origin of Business Values |
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Definition
| Internal vs External Motivation |
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Term
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Definition
1)Sole Proprietorship
2)Partnership
3)Corporation |
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Term
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Definition
YOU are completely responsible for all the debts,
Losses, and costs of a business. This means your personal savings can
Be seized to cover business costs |
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Term
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Definition
You are ONLY responsible for the amount you
Invested into the business, CANNOT be taken from personal assets |
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Term
Sole Proprietorship
(advantage and disadvantage) |
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Definition
A sole proprietorship is a business owned and operated by one individual. Unlimited liability, individual tax rate
ADVANTAGES:
-Taxation (1x)
-Control of Business
-Ease and cost of formation
-Secrecy
-Distribution and use of profits
-Government regulation
-Easy to close business
DISADVANTAGES:
UNLIMITED Liability
-Limited sources of funds
-Limited Skills
-Lack of Continuity (in case of death) |
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Term
Partnership
(adv and disadv) |
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Definition
A partnership is an association of two or more people who carry on as co-owners of a business, unlimited liability, single taxation. MANY VARIATION OF PARTNERSHIPS
ADVANTAGES
-Taxation (1x)
-Ease of organization
-Availability of capital and credit
-Combined knowledge and skills
-Decision making
-Not many Regulatory controls
DISADVANTAGES
UNLIMITED liability
-Distribution of profits
-Limited sources of funds
-Decision making can cause disagreements
-Life of the partnership
-Personal challenges (disagreements) |
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Term
C Corporation
(adv and disadv) |
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Definition
Legal entity, created by the state, whose assets and liabilities are separate from its owners
ADVANTAGES
-LIMITED Liability
-Transfer of ownership
-Perpetual life
-External sources of funds
-Expansion potential
DISADVANTAGES
-DOUBLE taxation
-Forming a corporation
-Disclosure of information
-Employee-owner separation
-Government Regulation |
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Term
S Corporation
(adv and disadv) |
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Definition
ADVANTAGES
Limited Liability
-Single Taxation
DISADVANTAGES
-Must be a domestic enterprise
-Shareholders must be US citizens
-Limited to 100 shareholder and one class of stock
-Shareholders must be; individuals, estates, trusts |
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Term
| Limited Liability Company (LLC) |
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Definition
ADVANTAGES
-Limited liability
-Choice of taxation
DISADVANTAGES
-May have limited life
-No stock issuance
-Need to file agreements |
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Term
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Definition
| The exchange of goods and services across national borders (borders have "disappeared" in many ways- internet, new technology...) |
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Term
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Definition
1) To obtain raw materials and goods that are:
-Otherwise unavailable (no nation has it all)
-Available elsewhere at a lower price
2) To foster relationships and economic growth |
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Term
| How do we decide what to trade? |
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Definition
Absolute advantage
Comparative advantage |
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Term
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Definition
A rare monopoly exists when a country is:
1)The only source of an item
2) The only producer of an item
3) The most efficient producer of an item |
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Term
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Definition
| A Country will specialize in products that it can supply more efficiently or at a lower cost than it can produce other items |
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Term
| Pros and Cons of Global trade |
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Definition
PROS: Some things are cheaper from other places, it can benefit everyone in theory, get rid of excess goods, the market is bigger on a global basis, and it can inspire innovation and competition on a larger scale, increases productivity
CONS: it can tarnish international relationships, can create dependence on other countries, your own domestic industry can suffer from international competition, can create outsourcing, can create a trade deficit |
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Term
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Definition
the use of government regulation to limit the import of goods and services (to protect your own domestic industry)
-Protectionism is a POLITICAL action as well as an ECONOMIC one
-Tariffs
-Quotas
-Embargo
-Subsidies |
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Term
| Organizational Structures (least to most risk) |
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Definition
| Import/export, licensing, franchising, contract manufacturing, joint venture, strategic alliance, foreign direct investment (FDI), Multinational corporations |
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Term
| International trade barriers |
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Definition
Economic- Level of development, currency exchange
Technological- varying levels of technology and infrastructure
Social/Cultural- understanding differences in behaviors
Legal/Political- instability, sanctions, laws, trade protectionism |
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Term
| Consequences of Globalization |
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Definition
1) OUTSOURCING and flow of labor- creates markets, lower costs of labor --> cheaper products, can take away American jobs
2) "flat" (uniform/easily expandable) world |
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