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Chapter 1-6

MGMT 1000 Chapter Notes - Chapter 1-6: Strategos, Purchasing Power Parity, General Agreement On Tariffs And Trade


Department
Management
Course Code
MGMT 1000
Professor
Kathleen Rodenburg
Chapter
1-6

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Chapter 1-6 definitions
Economic system: the way in which a country allocates its resources
Factors of production: the resources used to produce goods and services: labour, capitol,
entrepreneurs, and natural resources
Command economy: an econ. System where the govt controls all or most factors of production
and makes all or most product decisions.
Market economy: an economic system in which individuals control all or most factors of
production and make all or most product decisions.
Communism: the govt owns and operates all industries.
Market: an exchange process between buyers and sellers of a particular good or service
Input market: firms buy resources that they need in the production of goods and services
Output market: firms supply goods and services in response to demand on the part of
consumers
Capitalism: an economic system in which markets decided what, when, and for who to produce
Mixed market economy: a econ sys. Where both a command economy and a market economy;
most nations are this
Privatization: the transfer of activities from the government to the private sector
Competition act: prohibit a variety of business practices that lessen competition
Lobbyist: a person hired by company or an industry to represent its interests with government
Trade association: an organization dedicated to promoting the interests and assisting members
of a particular industry
Market: an exchange process between buyers and sellers of a particular good or service
Demand: the willingness and ability of buyers to purchase a product or service
Supply: the willingness and ability of producers to offer a good or service for sale
Law of demand: the principle that buyers will purchase (demand) more of a product as price
drops
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Law of supply: the principle that producers will offer (supply) more of a product as price drops
Demand and supply schedule: assessment of the relationships between different levels
different levels of demand and supply at different price levels
Trade association: an organization dedicated to promoting the interests and assisting the
members of a particular industry.
Demand curve: graph showing how many units of a product will be demanded (bought) at
different prices
Supply curve: graph showing how many uits’ product will be supplied (offered for sale) at
different prices
Market price (equilibrium price): profit-maximizing price at which the quantity of goods
demanded and the quantity and the quantity of goods supplied are equal
Surplus: situation in which quantity supplied exceeds quantity demanded
Private enterprise: an economic system characterized by private property rights, freedom of
choice
Private competition: a market or industry characterized by a very large number of small firms
producing an identical product so that non of the firms has any ability to influence
Monopolistic competition: a market or industry characterized by a large number of firms
supplying products that are similar but distinctive enough from another to give firms some
ability to influence price.
Oligopoly: a market or industry characterized by a small number of very large firms that have
the power to influence the price of their product and/or resources
Monopoly: a market or industry with only one producer, who can set the price of its product
and/or resources
Chapter 2
External environment: everything outside an organizations boundary that might affect it
Economic environment: conditions of the economic system in which an organization operates
Aggregate output: total quantity of goods and services produced by an economic system during
a given period
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Business cycle: pattern of short-terms ups and downs (expansions and contractions) in an
economy
Gross domestic product (GDP): total value of all goods and services produced within a given
period by a national economy through domestic factors of production
Gross national product (GNP): total value of all goods and services produced by a national
economy within a given period regardless of where the factors of production are located
GDP per capita: gross domestic product per person
Real gdp: GDP calculated to account for changed in currency values and price changes
Purchasing power parity: principle that exchanged rates are set so that the prices of similar
products in different countries are about the same
Productivity: measure of economic growth that compares how much a system produces with
the resources needed to produce it
Balance of trade: the total of a countries imports vs exports
Budget deficits: the result of the government spending more in one year than it takes in during
that year
Inflation: occurrence of widespread price increase throughout an economic system
Consumer price index: measure of the prices of typical products purchased by customers living
in urban area
Deflation: a period of generally falling prices
Unemployment: the level of joblessness among people actively seeking work in an economic
system
Fiscal policies: policies whereby governments collect and spend revenues
Monetary policies: policies whereby govt controls the size of the nations money supply
R&D: the activities that are necessary to provide new prod, tech, and services
Political-legal environ: conditions reflecting the relationship between business and govt, usually
in the form of govt. regulation
Outsourcing: strategy of paying suppliers and distributors to perform certain business processes
or to provide needed materials or services
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