chapter 1 for students.doc

Chapter 1 The U.S. Business Environment 1) A business provides goods or services in order to earn profits. 2) Non-profit businesses operate in many of the same ways as businesses that seek profits. 3) The external environment consists of everything inside an organizations boundaries that might affect it. 4) Businesses seek to be close to customers, establish strong relationships with suppliers, and distinguish themselves from competitors. 5) Global business environment refers to the international forces that affect a business. 6) The technological environment only includes electronics and telecommunications used to perform business activities. 7) Political-legal environment includes the customs, mores, values and demographic characteristics of the society in which an organization functions. 8) An example of the influence of the economic environment is when most people have jobs and therefore a growing company may find it necessary to pay higher wages and offer more benefits in order to attract workers from other companies. 9) A factor of production is a nations system for allocating resources among its citizens. 10) An entrepreneur is a business that accepts the risks and opportunities to create and operate.a new business venture. 11) Physical resources are the data and other information used by businesses. 12) Economic systems allocate the factors of production differently. 13) A planned economy relies on a centralized government to control all or most of the factors of production and to make all or most production and allocation decisions. 14) Capitalism allows for the private ownership of the factors of production. 15) In a socialist economy, the government owns and operates selected major industries. 16) The law of demand states that buyers will purchase more of a product as its price drops and less of a product as its price increases. 17) The point at which the supply curve and the demand curve intersect is the market price. 18) A diffe