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  • Business

    Any activity that provides goods or services to consumers for the purpose of making profit.

    Main participants of business

    Owners, employees, and customers.

    Functional areas of business

    Management, operations, marketing, accounting, and finance.


    Responsible for planning, organizing, staffing, directing and controlling company's resources.


    Responsible for the work performance of others


    Perceptible by touch


    Unable to be touched or grabbed

    Operations manager

    The person who designs and oversees the transformation of resources into goods or services

    Responsible for assuring that products are of high quality

    Operations manager


    Consists of everything that a company does to identify customers needs and designs products to meet those needs


    Develops the benefit and feature of products

    Financial accountant

    Prepare financial statements to help users both inside and outside of the organization asses financial strength of the company

    Managerial accountant

    Prepare information su had as reports on the cost of materials used for the production process. Internal use only


    Planning for, obtaining, and managing a company's funda


    Transforms resources (labor, materials , money) into products


    Measuring,summarizing and communicating financial and managerial information

    External forces that influences business activities

    Economy, government, consumer trends, and public pressure to act as good corporate citizens

    Strong economy

    People have more money to eat out at places where food standards are monitored by a government agency


    The study of production, distribution, and consumption of goods and services


    The inputs to produce outputs

    Factors of production

    Land, labor, capital, entrepreneurship

    Land and natural resources

    Provide needed raw material


    Transforms raw materials into goods or services


    Needed for production process (equipment, buildings, vehicles, cash)


    Provides skill and creativity needed to bring other resources together to produce a good or service to be sold to a marketplace


    Study the interactions between household and businesses and look at the ways in which the factors of production are combined to produce the goods and services people need

    Questions asked by economists

    1. What goods and services should be produced to meet consumers needs? In what quantity? When should they be produced?
    2. How should goods be produced?
    3. Who should receive the goods and services produced?

    Economic systems are divided into

    Planned systems, and free market systems

    Planned system

    The government exerts control over the allocation and distribution of all or some goods and services

    The system with the highest level of government control


    Communist economy

    The government owns all or most enterprises

    Central planning by the government dictates

    The questions asked by economist

    Free market system

    The economic system in which most businesses are owned and operated by individuals


    Dictates how goods and services will be allocated

    Mixed market economy

    Relies on both markets and the government to allocate resources


    An economic system in which individuals own or operated the majority of businesses that provide goods and services

    Consumer productions

    Goods and services purchased by individuals for personal consumption

    Command economy

    An economic system in which the government decides what goods and services will be produced, how they will be produced, for whom available the goods and services will be produced, and who owns and controls the major factors of production

    Invisible hand

    A term created by Adam smith to describe how an individual's personal gain benefits others and a nations economy

    Laissesz faire

    Leaving things alone

    Types of competition

    Perfect competition, monopolistic competition, oligopoly, and monopoly

    Perfect competition

    The market situation in which there are many buyers and sellers or a product, and no single buyer or seller is powerful enough to affect the price of the product

    Example of perfection competition

    Commercial fishermen brings his fish to the local market, he has little control over the price he gets and must accept the going market price


    The quantity of a product that producers are willing to sell at each value of various prices


    The quantity of a product that buyers are willing to purchase at each of various prices

    Market Price

    The price at which the quantity demanded is exactly equal to the quantity supplied

    Equilibrium Price

    The price at which the buyers are willing to purchase the amount the sellers are willing to sell

    Two types of business

    Goods, services

    Monopolistic Competition

    A market situation in which there are many buyers along with a relatively large number of sellers who differentiate their products from the product of competitors


    A market (or industry) in which there are few sellers


    A market (or industry) with only one seller, and there are barriers to keep other firms from entering the industry

    Product Differentiation

    The process of developing and promoting differences between ones products and all competitive products

    Natural Monopolies

    Public utilities

    Legal Monopolies

    Arises when a company received a patent giving it exclusive use of an invented project or process

    Economic Goals

    Growth, high employment, and price stability

    Gross domestic product (GDP)

    The total value of all goods and services produced by all people within the boundaries of a country during a one year period


    The rise in the level of peoces


    A decrease in the level of prices

    Unemployment eate

    The percentage of a nations labor force unemployed at any time

    Consumer price index (CPI)

    A monthly index that measures the changes in prices of a fixed basket of goods purchased by a typical consumer in an urban area

    Producer price index (PPI)

    An index that measures prices that producers receive for the finished goods

    Business cycle

    The reoccurrence of periods of growth and recession in a nations economic activity

    General phases of the business cycle

    Prosperity, recession, depression, recovery


    A severe recession that lasts no longer than a typical recession and has a larger decline in business activity when compared to a recession

    Full employment

    When 95% of those wanting to work are employed

    Price stability

    When the average of the prices for goods and Services either doesn't change or had changed very little

    Monetary policy

    Federal reserves decisions that determine the size of the supply of money in the nation and the level of interest rates

    Monetary policy is used to

    Control the money supply and interest rates

    Federal Reserve System "FED"

    Has the power the control money, supply and interest rates

    Fiscal policy

    Government influence on the amount of savings and expenditures; accomplished by altering the tax structure and by changing changing the levels of government spending


    When the government takes in more money in a given year than it spends


    When the government spends more money than it takes in

    National debt

    The total amount of money owed by the federal government

    Betty Vinson

    Director of management of worldcom

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