Download QUIZ 1 1. Define the nature of U.S. business and identify its main

QUIZ 1
1. Define the nature of U.S. business and identify its main goals and
functions?
2. Trace the history of business and the changing view of business
accountability in the United States.
3. Describe the different types of global economic systems according to the
means by which they control the factors of production through input and
output markets.
4. Show how demand and supply affect resource distribution in the United
States.
5. Identify the elements of private enterprise and explain the various
degrees of competition in the U.S economic system.
SUMMARY OF LEARNING OBJECTIVESi
1. Define the nature of U.S. business and identify its main goals and functions?
A business is an organization that provides goods or services to earn profits. The prospect of
earning profits – the difference between a business’s revenues and expenses – encourages people
to open and expand businesses. Profits reward owners for taking the risks involves in investing
their money and time. Businesses produce most of the goods and services that Americans consume
and employ most working people.
2. Trace the history of business and the changing view of business accountability in the
United States.
The landscape of the U.S. business has evolved over the course of centuries. With the coming of
the Industrial Revolution in the middle of the eighteenth century, the factory system brought
together in one place the materials and workers required to produce items in large quantities and
the new machines needed for mass production.
The nineteenth century witnessed the rise of the entrepreneur on a grand scale, and U.S.
business embraced the philosophy of laissez-faire- the principle that the government should not
interfere in the economy but should let business function without regulation. Unfortunately, both
the growth of corporations and improved assembly-line output came at the expense of worker
freedom. Thus, the production era saw the rise of labor unions and the beginnings of government
regulation.
According to the marketing concept, which emerged in the 1950s and 1960s, producers of
goods and services begin by determining what customers want and then provide it. The 1980s saw
the emergence of a global economy. Improved communication and transportation, in addition to
more efficient international methods for financing, producing, distributing, and marketing
products and services, have combined to open distant marketplaces to businesses. The information
era, fueled by the Internet, should give a boost to trade in all sectors of the economy, especially
services.
3. Describe the different types of global economic systems according to the means by which
they control the factors of production through input and output markets.
An economic system is a nation’s system for allocating its resources among its citizens, both
individuals and organizations. Economic systems differ in the ways in which they manage the five
factors of production: (1) labor, (2) capital, (3) entrepreneurs, (4) physical resources, and (5)
information resources. Different types of economic systems also differ in the ways decisions are
made about production and allocation.
In a market economy, businesses and households interact in two different relationships. In the
input market, firms buy resources from households, which are thus suppliers. In the output
market, firms supply goods and services in response to demand on the part of households. The
political basis of market processes is capitalism, which fosters private ownership of the factors of
production and encourages entrepreneurship by offering profits as an incentive.
4. Show how demand and supply affect resource distribution in the United States.
Demand is the willingness and ability of buyers to purchase a product or service. Supply is the
willingness and ability of producers to offer a product or service for sale. The law of demand
holds the buyers will purchase (demand) more of a product as its prices drops and less as its price
increases. The law of supply holds that producers will offer (supply) more of a product for sale
as its price rises and less as its price drops.
A demand and supply schedule, which is obtained from marketing research and other studies
of the market, reveals the relationships among different level of demand and supply at different
price levels. A demand curve shows how many products will be demanded (bought) at different
prices. A supply curve show how many products will be supplied (offered for sale) at different
prices. When both curves are plotted on the same graph, the point at which they intersect is the
market price or equilibrium price – the price at which the quantity of goods demanded ant the
quantity of goods supplied are equal.
5. Identify the elements of private enterprise and explain the various degrees of competition
in the U.S economic system.
Market economies reflect the operation of a private enterprise system – a system that allows
individuals to pursue their own interests without government restriction. Private enter price works
according to four principles: (1) private property rights; (2) freedom of choice; (3) profits; and (4)
competition. Economists have also identified for degrees of competition in a private enterprise
system: (1) perfect competition; (2) monopolistic competition, (3) oligopoly; and (4) monopoly.
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Griffin, Ricky W. and Ronald J. Ebert 2006. Business. 8th edition. Upper Saddle River New Jersey: Pearson
Education, Inc.: pp 22-23