Chapter 1 questions
Chapter 1 questions BMGT 1010-001
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This 3 page Study Guide was uploaded by Tiew Chen Wooi on Thursday October 6, 2016. The Study Guide belongs to BMGT 1010-001 at University of Toledo taught by Dr. Karen in Fall 2016. Since its upload, it has received 21 views. For similar materials see Business Principle in Business at University of Toledo.
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Date Created: 10/06/16
Check Your Progress 1. What is the fundamental goal of business? Do all organizations share this goal? The fundamental goal of business is to earn a profit, the difference between what the price to make and sales of a product and what a customer willing to pays for it. However, not all of the organization share this goal. Nonprofit organizations do not share the purpose of earning profits although they provide goods and services. Nonprofit organizations only engage in management, marketing and finance to reach goals. 2. Name the forms a product may take and give some examples of each. Product is a good or service with tangible and intangible characteristics that provide satisfaction and benefits. Tangible products such as automobile, phone and computer. Intangible products such as transportation services, cell phone services, tax services and professionals generate ideas for solving problems. 3. Who are the main participants of business? What are the main activities? What other factors have an impact on the conduct of business in the United States? The main participants of business are customers, owners, employees, government regulation and community. The main activities are management, marketing and finance. Management is concerned with acquiring, developing and using resources effectively and efficiently. Management involves planning, organizing people, coordinating staff and controlling tasks. Marketing focus all their activities to satisfying customer needs and wants by providing goods and services. Marketing involves in research, product development, promotion, pricing, and distribution. Finance and owner are responsible for obtaining financial resources for operating business including obtaining money and using money effectively. Factors that conduct of business are legal and regulatory forces, the economy, competition, information technology, the political environment, social responsibility and ethics. 4. What are four types of economic systems? Can you provide an example of a country using each type? The four types of economics systems are communism, socialism, capitalism and mixes economies. Communism as a society in which the people, without regard to class, own all the nation’s resources example China using communism. Socialism is the economic system that government owns and operates basic industries, but individuals own most of the business such as Sweden and India are democratic and recognize basic individual freedoms. Capitalism individuals own and operate the majority of businesses that provide goods and services. In pure capitalism, also name as free-market system, all economic decisions are made without government intervention such as United States and Canada practices capitalism. Mixed economies have elements from more than one economic system, no country practices pure capitalism, socialism and communism. 5. Explain the terms supply, demand, equilibrium price, and competition. How do these forces interact in the American economy? Demand is the number of goods and services that consumers are willing to buy at different prices at a specific time. Supply is the number of goods or services that businesses are willing to sell at different prices at a specific time. Equilibrium price is the price at which the supply of a product equals demand at a specific point in time is the equilibrium price. Competition is the rivalry among businesses to convince consumers to buy goods or services. The forces prevent sellers who sell at higher price and consumer who cannot afford the price of goods and services at the equilibrium price from participating in the market. 6. List the four types of competitive environments and provide an example of a product of each environment. The four type of competitive environment are pure competition, monopolistic competition, oligopoly and monopoly. Pure competition exists when many small business selling one similar product such as corn and wheat. Monopolistic competition exists when the goods they sell are smaller and fewer than pure competition such as soft drinks and restaurants. Oligopoly exists when it is expensive for new firms to join in the competition so very few business sell the product such as oil and auto manufacturers. Monopoly exists when only one business providing product in the market such as electricity and water. 8. Why are fluctuations in the economy harmful? Inflation can be harmful if individuals’ incomes do not increase at the same pace as rising prices, reducing their buying power. Get Involved 2. Why is it important for the government to measure the economy? What kinds of actions might it take to control the economy’s growth? Government measure the economy to determine whether they are expanding or contracting and whether corrective action is necessary to minimize the fluctuations. The most common is gross domestic product (GDP) measured to control the economy’s growth, which is the sum of all goods and services produced in a country during a year and it does not include profits from companies’ oversea operation. Budget deficit occur when a nation spends more than it takes in from taxes. Solve the Dilemma 1. Explain and demonstrate the relationship between supply and demand for Mrs. Acres Homemade Pies. Supply is the number of products business are willing to sell at different price at specific time. Demand is the number of products consumer are willing to buy at different price at specific time. The relationship between the price and the number of homemade pie consumer willing to buy. When Shelly increases the supply of the products, the quantity demand of the products also increases. 2. What challenges does Shelly face as she considers the three options? If Shelly maintain current production levels and raises prices, the quantity demand will decreases and cause surplus in supply. When she raises prices new competitive come in and sell it at the lower prices, customer will choose to buy pies with reasonable prices. If she expand the facility and staff while maintaining the current price her profit will go lower while the supply increases then she has enough quantity to supply her customers. Contract the production of the pies to a national restaurant chain, giving Shelly a percentage of profits with minimal involvement will cause a lot of demand when supply still remain. This may not fulfil all her customers demand and cause customers move to other that have enough supply of pies. 3. What would you do in Shelly’s position? I would choose to expand the facility and staff while maintaining the current price because I rather fulfil my customers demand by increases the supply of pies than just earning more profits. If the demand keep raising my profits will definitely raises too.
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