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ลำดับตอนที่ #5 : [[R.S.]]General Business Test::Chapter.1 to 3::10.9.09

review sheet of General Business for

Chapter 1 - 3* 10.Sep.09

 

Chapter.1 :: Basic Economic Concepts  [[Page.4]]

Section 1.1 – A Look at Wants and Needs [[Page.6]]

-          Wants and needs determine what products and services businesses provide.

·         Wants are things that you don’t have to have to survive, but would like to have.

ð Private wants (individual people)

ð Public wants (widely shared by many people)

·         Needs are things that you must have in order to survive.

ð The basic needs of people include food, water, shelter, and clothing.

-          Businesses provide …

·         Goods = physical products (eg. Shampoo, microwave, refrigerator)

·         Services = tasks that businesses perform for consumers (eg. Hotel, 7-11)

·         Most people have unlimited wants for goods and services but some do not have enough resources, or items that people can use to make or obtain what people need or want, to satisfy all their wants. (The more money you make, the more goods or services you can buy)

-          Resources limit the number of needs and wants people can satisfy.

-          To make the best use of limited resources, determine what you needs are and satisfy them first

-          We must make our choices and decisions carefully to make the most of the resources.

-          By going through the decision-making process, it can help us to identify & consider our various alternatives and their consequences before we make final decision.

·         Step 1 :: identify the situation

·         Step 2 :: identify possible courses of action

·         Step 3 :: determine the pros and cons

·         Step 4 :: make a decision

·         Step 5 :: evaluate your decision

-          When making an unimportant/small decisions (like buying an apple juice), we don’t have to go through all of the steps in decision-making process. Only do that when making decision about something important/big (like buying a car)

·         The longer a decision will affect your life, the more you need to evaluate your options and consider the possible consequences.

-          Competition among business is intense that’s why they must …

·         Decide how to best use and conserve their resources.

·         Make thoughtful decisions that are consistent with their goals.  

Section 1.2 – Business Activities [[Page.11]]

-          Your wants and needs are usually satisfied by business, any commercial activity that seeks profit by providing goods and services to others in exchange for money.

·         Profit is the money left over after a business has paid the cost of providing its goods & services

-          Businesses provide consumers and other businesses with necessities as well as goods & services that make life easier and better.

-          The wealth created by business (which comes from profit) benefits the entire community because businesses pay taxes and provide jobs.

-          Companies thrive on competition, the contest between businesses to win customers.

·         Competition is possible because companies have the freedom to produce the products they think will be the most profitable.

ð As a result, goods and services are produced and sold at the lowest possible cost.

-          For companies to successfully compete in the global economy, they must offer quality products with outstanding service at competitive prices.

-          For businesses to develop products or services, they must …

·         Identify opportunities for products or services.

·         Evaluate the demand for products or services.

·         Obtain start-up money and operate capital.

·         Manage the production of goods and/or services.

·         Market the goods and/or services.

·         Keep records to satisfy government requirements and improve processes.

-          Some business activities should be supported by market research, the act of gathering & analyzing information about wants, needs, and preferences of consumers in a certain market

·         It helps a business identify opportunities, analyze demand, and respond to consumer demand for goods and services.

-          A consumer is a person who uses goods or services.

·         Businesses decide what goods & services to produce to meet the wants & needs of consumers

·         Meanwhile, they affect consumers when they modify or discontinue the products.

-          Consumers decide what kinds of goods and services they want and where they will buy them.

·         When they choose to buy products, it’s a reward to the companies

·         When they choose not to buy products, it’s a failure to companies

ð To avoid failure, a business can modify its products, services, and business practices to satisfy consumers.

 

Chapter.2 :: Economic Resources and Systems  [[Page.20]]

Section 2.1 – Economic Resources [[Page.22]]

-         Besides individuals, societies also have to deal with a shortage of resources, or lack of resources, called scarcity.

·         The principle of scarcity states that there are limited resources for satisfying unlimited wants and needs.

·         And because of that, to have one thing may mean giving up something else.

-         Factors of productions are all the economic resources necessary to produce a society’s goods and services. There are four factors of production ::

1.    Natural resources

·         are raw materials from nature that are used to produce goods

·         can often be processed in various ways to create goods

·         Economy of many countries is primary based on its natural resources.

·         There are two types of natural resources

1.1   renewable resources = can be reproduced (eg. Wheat, cattle)

1.2   nonrenewable resources = limited (eg. Coal, iron, fuel, oil)

2.    Labor resources (or human resources)

·         are people who make the goods and services for which they are paid

·         can be skilled or unskilled, physical or intellectual

·         Eg. Teachers, bank managers, workers, etc.

3.    Capital resources (or capital goods)

·         are the things used to produce goods and services

·         Eg. Buildings, materials, equipments, vehicles, etc.

4.    Entrepreneurial resources

·         are used by the people who recognize opportunities and start business

·         Entrepreneurship is the process of recognizing a business opportunity, testing it in the market, and gathering the resources necessary to start and run a business.

·         An entrepreneuris an individual who undertakes the creation, organization, and ownership of a business.

Section 2.2 – Economic Systems [[Page.27]]

-         Economics is the study of how individuals and groups of individuals strive to satisfy their needs and wants by making choices.

-         No society has enough productive resources available to produce everything people want & need

-         Societies make economic decisions about how to meet the needs of people by answering three basic economic questions.

1.       What should be produced?

ð Deciding to use a resource for one purpose means giving up the opportunity to use it for something else. This is called an opportunity cost.

2.       How should it be produced?

ð Methods, labor, quality of items produced are important factors.

3.       Who should share in what is produced?

ð The amount of income people receive determines how many goods & services they can have.

-         Economic systems are the methods societies use to distribute resources. Two basic types of economic systems are ::

1.       Market economy

·          economic decisions are made in the marketplace, where buyers and sellers meet to exchange goods and services for money.

·         Also be called a private enterprise system, the free enterprise system, or capitalism.

ð There is a relationship between price, supply, and demand.

= Price is amount of money given or asked for when goods & services are bought or sold; it’s determined through interaction of supply and demand.

= Supply is amount of goods & services that producers will provide at various prices

= Demand is amount or quantity of goods &services that consumers are willing to buy at various prices.  

~ The lower the price, the more consumers will buy.

~ Supply and demand interact with each other.

~ The equilibrium price is the point at which the quantity demanded and the quantity supplied meet.

ð Competition between similar businesses is one of the basic characteristics of market economy

~ Profit motive is the desire to make a profit, and profit is the reward for taking a risk and starting a business.

2.       Command economy

·         key economic decisions are made by central authority

·         the government owns and controls all the resources and business as well as making decisions of what to produced

·         Also be called socialism.

	Market economy	Command economy
Economic decisions	made in the marketplace	made by a central authority
Also called	capitalism, private enterprise system, free enterprise system	socialism
Resources & businesses	privately owned	controlled by government
Highly skilled workers	earn higher incomes than those low-skilled workers	earn the same wages as low-skilled workers
Competitions	lots	none
Choices of what to buy	lots	little
Incentive to produce better products	lots	none

 

-         A mixed economy is an economy that contains both private and public enterprises (combines elements of capitalism and socialism)

·         Most nations have mixed economy in which private ownership of property and individual decision making are combined with government intervention and regulations.

 

Chapter.3 :: Economic Activity in a Changing World  [[Page.36]]

Section 3.1 – Economic History [[Page.38]]

-         Major shifts in certain growth areas can change the emphasis of the U.S. economy.

·         The United States has experienced 4 major economic shifts….

1.       Early 1600s => goods & services are bartered => service-based economy

2.       1700s => farming was common way of life => agriculture-based economy

3.       Mid-1850s => Industrial Revolution => industry-based economy

4.       1900s => rapid movement of information by computers => information-based economy

-         Agriculture, industry, services, and information all contribute to the health of the U.S. economy

-         Economic indicators are figures used to measure economic performance such as how much a country is producing, whether its economy is growing, and how it compares to other countries. Some important economic indicators include …

·      Gross domestic product (GDP) is the total value of the goods and services produced in a country in a given year. It is one of the most important indicators of the status of economy

ð To calculate the GDP, economists compute the sum of goods and services sold to businesses, consumers, the government, and other countries.

·      The standard of living is the level of material comfort as measured by the goods and services that are available.

ð The more goods and services produced per person, the higher the standard of living.

ð The standard of living refers to the amount of goods and services people can buy with the money they have.

·      The unemployment rate measures the number of people who are able and willing to work but cannot find work during a given period.

·      Inflation is a general increase in the price of goods and services.

ð With inflation, one’s buying power decreases cause’ it costs more to buy goods & services

ð It can causes by war, increase in cost of raw materials/expenses/salaries, or when government allows too much money to circulate in the economy.

·      Deflation is a general decease in the price of goods and services.

ð People have less money to buy goods, so the demand continues to go down.

-          The main source of income for the government is taxes.

·      When the government spends more on programs than it collects in taxes, the difference in the amount is called a budget deficit.

·      The total amount of money a government owes (from the public banks or other countries) to pay for the budget deficit is called its national debt.

·      When a government’s revenue exceeds its expenditures during a one-year period, it has a budget surplus. The government often uses a surplus to cut taxes, reduce national debt, or increase spending for certain programs.

Section 3.2 – The Business Cycle [[Page.43]]

-         The U.S. economy is shaped by a mix of public and private forces.

-         The Federal Reserve, informally called “the Fed,” is a government agency that guides the economy by regulating the amount of money in circulation, controlling interest rates, and controlling the amount of money loaned.

-         Economies go through up and downs due to wars, foreign competition, changes in technology, and changes in consumer wants.

·         For example, U.S. economy went through slumps in economic activity with increased unemployment and new waves of increased productivity and rises in GDP.

-         The rise and fall of economic activity over time is called the business cycle.

The four stages of business cycle are …

1.       Prosperity =is a peak of economic activity with low unemployment rate, high production of goods and services as well as new businesses that open.

·         There is greater demand for goods to be produced and people can buy more goods from other countries (which benefits those countries as well)

2.       Recession =iswhen economic activity slows down.

·         GDP declines due to the general drop in the total production of goods and services.

·         There are downturns in many industries (which can affect other businesses as well); this effect is often called ripple effect.

3.       Depression is a deep recession that affects the entire economy & lasts for several years.

·         There is high unemployment and low production of goods and services. 

·         Many banks across the country failed.

ð Eg. “Black Tuesday” on October 29, 1929 nearly 50% of GDP decline and people out of work rose nearly 800%

4.       Recovery is rise in business activity after a recession or depression

·         production starts to increase

·         new demand for goods and services stimulates more production, and GDP grows.

·          It leads back to prosperity as new businesses open & existing businesses increase productivity

·         Some businesses innovate .. they bring out new goods and services

 

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