Test 1

Business 1010 with Milburn at University of Colorado Boulder

About this deck

By: Morgan Coulahan
Textbook: BCOR 1010: Introduction to Business
Created: 2009-09-18
Size: 10 flashcards
Views: 174

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What are the Factors of Production?

The Factors Of Production Include:

1) land (natural resources)

2) Labor (workers)

3) Capital (Machines, tools, buildings etc.)

4) Entrepreneurship

5) Knowledge and information

What is the Role of Profit?

The primary goal of all businesses is to gain a profit. non- profit organizations are just that, organizations, not businesses.

The World's economic Systems

An economic system:

how a society allocates its resources to provide goods and services

World economic systems:

the basic difference: the extent to which the factors of production are owned and directed by private interests or publicly by the government.

the basic impacts: ownership, control, competition, consumer preferenes, employment options, profit/taxation

3 Main Economic Systems:

Communism

Socialism

Capitalism

Communism

no competition
Central government planning determines what goods and services satisfy citizens needs, how the goods are produced and how they are distributed
Examples: Cuba and North Korea

Socialism

some factors are owned by the people

Central government planning for basic goods and services
most basic industries owned by the government i.e. post office, utilities, health care etc.
examples: sweden, india, israel

Capitalism

Factors of production are privately held and used to make profit

earn profits by providing products and services
freedom
free to succeed or fail
free to make choices

product mix
price
hire/fire
etc.

Adam Smith

self interest acts as a driving power
competition (the invisible hand) acts as a self regulator
adam smith thinks in terms of pure competition (infinite buyers and sellers)
NO government, but needs Justice
efficient allocation of resources at al costs

Free Market Capitalism

also known as "laissez faire"
competition will produce the optimal quantity and variety of goods
uses the principle of the "inviisible hand" self regulating market due to competition
society's welfare is maximized
tradeoff: efficiency over equality
Self interested behavior on the part of all:

producers
consumers
labor force
investors

Justice

Requirements of the Free Market

atomistic markets: infinite buyers and sellers
all economic actors act will self interest
no other influence (i.e. government)
result: efficient allocation of resources

FOUR BASIC RIGHTS UNDER CAPITALISM

right to private property
the right to own a business and keep the majority of it's profits
the right to compete for customers wages
freedom of choice

The Laws of Supply and Demand

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About this deck

By: Morgan Coulahan
Textbook: BCOR 1010: Introduction to Business
Created: 2009-09-18
Size: 10 flashcards
Views: 174

About StudyBlue

“I have used this website for three exams, and I see a huge difference in my test results.”
Naj