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Study Guide

[ENT-101] - Midterm Exam Guide - Everything you need to know! (14 pages long)


Department
ENT
Course Code
ENT-101
Professor
Professor Polito
Study Guide
Midterm

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Suffolk
ENT-101
MIDTERM EXAM
STUDY GUIDE

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Chapter One: Exploring the world of Business and
Economics
1.2 Business: A Definition
Business: the organized effort of individuals to produce and sell, for a profit, the
goods and services that satisfy society’s needs.
For a business to be successful it needs four resources….
1. Material: includes the raw materials used in manufacturing processes as well as buildings
and machinery.
2. Human: the people who furnish their labor to the business in return for wages.
3. Financial: the money required to pay employees, purchase materials, keep the business
operating.
4. Informational: tells managers how effectively the other three resources are being
combined and used.
The ultimate goal of a business is to satisfy people’s needs.
Three types of businesses…
1. Manufacturing and goods producing: eg. Sony and Apple. Produce materials into tangible
goods.
2. Service and service producing: eg. Nails, spas, H&R Block.
3. Marketing Intermediaries: eg. Walmart, Macy’s. Buy products from manufacturers then
resell them
The importance of manufacturing…
oHaving a strong domestic manufacturing industry helps decrease labor costs
oBetter to get the best deal rather than just American products, in order to increase a
company’s profits
oShould be more concerned with jobs and worker wages than affordable products for
consumers
The relationship between sales and profit: profit is what remains after all business expenses have
been deducted from the sales revenue. When sales revenue is greater than expenses, a company
makes a profit.
What is the purpose of profit?
oIt’s a reward for producing goods and services that people want.
oCompensation for assuming the risks of ownership such as not receiving payment and losing
investment.
Stakeholders: the different people and groups of people who are affected by the
policies and decisions made by an organization
1.3 Types of Economic Systems
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Economics: the study of how wealth (anything of value) is created and
distributed (who gets what)
Microeconomics: the study of the decisions made by individuals and
businesses
1. Examines, for example, how the prices of homes affect the number of homes
individuals will buy
Macroeconomics: the study of national and global economy
2. Examines the economic effect of… national income, unemployment, inflation, taxes,
government spending, interest rates and similar factors on a specific nation or society
Economy: the way in which people deal with the creation and distribution of
wealth
There are several factors of production (the resources used to produce goods and services)
1. Land & Natural Resources: elements that can be used in the production such as crude
oil, forests, minerals, land, water, air
2. Labor: the time and effort that we use to produce goods and services, including
managers and employees (human resources)
3. Capital: the money, facilities, equipment, and machines used in the operation of
organizations. Can also be the manufacturing equipment even though people think it’s
just money
4. Entrepreneurship: the activity that organizes land and natural resources, capital and
labor. The willingness to take risks and the knowledge and ability to use the other
factors of production.
Entrepreneur: a person who risks time, effort, and money to start and operate a
business.
Capitalism: an economic system in which individuals own and operate the
majority of business that provide goods and services.
All about a person’s own benefit
The market drives supply and price
Limited government involvement
Privately owned Resources
Laissez Faire – “Let them do” (Adam Smith)
Right to create wealth
Right to own private property
Economic freedom and freedom to compete
Limited government involvement
Concept of the “invisible hand”: a term created by Adam Smith to describe how an individual’s
person gain benefits others and a nation’s economy
His concept is based on a market economy
Market economy: an economic system in which business and individuals decide
what to produce and buy, and the market determines quantities sold and prices.
Prices determined by the interaction of consumers and businesses
Capitalism in the United States: the economic system is rooted in the laissez-faire capitalism;
however real-world economy is not so laissez-faire…
Real world economy is a mixed economy
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