The law of demand states that there is an inverse relationship between price and demand.

When the price goes up, demand goes down. People will stop buying expensive things if they feel that it is not necessary. As things get more expensive, it will fall out of reach from people’s budgets. When the price goes down, demand goes up. People are more likely to buy something if it is cheap.

When demand goes up, price goes up. When demand goes down, price goes down.

The law of supply states that there is an increase in supply when the price goes up.

When price goes up, supply goes up. Companies want to gain the most profit. When people are willing to pay a high price for a product, they will supply more to please the consumers.

When price goes down, supply goes down. If the people don’t want the product, producers will not waste time creating an item that would not be sold easily.

When supply goes up, price goes down. When supply goes down, price goes up.

There is an inverse relationship between supply and demand. If the demand is great, supply will decrease; if the demand is low, supply will increase.

A democracy simply means the society chooses what happens. For example, a democratic workplace would consider workers' votes for a new change, not just the manager(s)’. 

In a socialist economy, producers aim to directly answer human needs. This includes healthcare, food, water, and shelter. The items are produced by the society itself, usually through means of farming. Locally grown and made things are heavily supported. The items are produced for every single individual, without discrimination, from the government which is decided by a democracy. The government purchases the raw goods for production.

Communism is a classless society in which the central government chooses for the people.

In a mixed economy, the producers produce whatever they want, especially if the demand for the product is high. This is called supply and demand. However, there are normally restrictions on certain products placed by the government like unsafe materials. The producers produce wherever they want to, however they want to with limitations placed by the government. There is a minimum wage and unsafe production processes are banned. The items are produced for the people who demand it. This is supply and demand-whoever wants the product buys it. This can sometimes be limited by the producers themselves, who can limit the amount consumers can buy (ex. toilet paper). The producers themselves buy the raw goods for production. They may choose to outsource if they wish. However, they must abide by government-imposed laws. 

In a free market society, producers produce whatever they want, especially if the demand for the product is high. The producers produce where they want to, however they want to.  Methods of production may include free, voluntary labor or paid jobs. The items are produced for the people who demand it. The producers themselves buy the raw goods for production. They may choose to outsource if they wish.

A capitalist society functions with private owners owning capital goods (NOT the government) and sells these products for a profit.

In a planned system, the products produced depend on the opinions of central planners. Even the prices are dictated by them. The production process is decided by the central planners, who allocate resources to trusted companies. The items are produced for every single individual from the government. The government may discriminate as they wish, but that is not a “pure” reign. This type of system can also be referred to as a “command economy”.

As the price goes up, more people will be eager to supply the product to make a profit. 

As the price of a product increases, the demand decreases.

5 Shifters of Demand

1. Taste/Preferences

2. Number of Consumers

3. Price of Related Goods

4. Income

5. Expectations    

5 Shifters of Supply 

1. Price of Resources

2. Number of Resources

3. Technology

4. Government Involvement - taxes, subsidies

5. Expectations

If you were to draw the supply curve and demand curve on the same map, the point in which both lines intersect is the equilibrium. The amount demanded is the amount supplied.

A monopoly occurs when one company holds control of the product market. This is usually outlawed as economists determined competition actually benefits the market; also, if one company is in control, prices can unfairly skyrocket. There is no entry to the market and very restricted information.

An oligopoly occurs when multiple companies hold controls over the market. This is not outlawed and is, in fact, happening at the moment. Common examples of this type of market include medicinal and electrical companies. There is a high barrier to entry including expensive costs. The market is informed of the product but with minimal detail.

A pure competition occurs when companies sell identical products. Nobody can influence the market price of their product-this usually occurs in command economies.

5 conditions:

• Many employees in company

• Identical products, standardized

  • crops: corn, potatoes, strawberries

• Can enter/exit the market at ease

• Independent buyers and sellers

• Buyers/sellers both informed about products

A monopolistic competition has products which are slightly different from each other, whether it be quality, colors, or small additions to the product. Depending on how the unique selling proposition of each product plays out, some may be considered price makers.

A recession is a 6 month period (or more) of economic slow-down, usually internationally. Trade and GDP usually fall during these times. There is also less business and consumer investment, less confidence, unemployment, and decreased productivity. 

The expansion process occurs with positive economic indicators (GDP, employment, consumer confidence) rising. The peak occurs when the economy reaches its maximum. Contraction occurs after the peak, when the economy is stable, although consumer confidence slowly decreases. Finally comes the trough, where the lowest point of the cycle is reached. Then comes expansion, and the process begins again.

Prices rise steadily and money loses its value. This can be caused by printing too much money. Generally, an economy aims for about 2-3% inflation to avoid deflation.

Deflation occurs when prices fall throughout the economy. Money gains value. It’s a sign of a weakening economy.

Fiscal policy is how the government takes money from consumers and spends the money with its impact on the business cycle.

The Environmental Protection Agency regulates how chemicals and pollutants are used.

Identity theft occurs when unauthorized beings make purchases on another persons’ account or uses their information. This is generally outlawed.

The CPI tracks the price of goods and services as they increase of time. It measures the inflation/deflation of commonly bought costs.

GDP: Consumer spending + investment + government spending +  exports - imports

It measures the value of products produced within a country’s borders. 

Economic indicators are statistics that measure the performance and efficiency of the economy.

Economic globalization is the concept that national economies are becoming more closely related and integrated with one another.

Ethics is the standard of what is right and wrong-they are generally based on values. They are used in business when making sure all products are being made safely. Things that go against ethics include sweatshops and pollutants.

Insider trading is illegal. It is the use of unpublicized information to invest in stocks to gain profits. Recently, an Amazon executive was caught insider trading with Amazon stock and was consequently jailed.

CSR is defined as social contributions a business takes. Usually it is aligned with the company’s vision and mission statements. (For example, technological companies donate to children education facilities).

Whistleblowing is an option available to hurt employees at whistleblowers.org. Essentially, employees wronged by a company (for example: being paid under minimum wage, too long hours, or any breach of ethics), are able to report the company for investigations. Whistleblowers are also protected legally by the government to some extent.

Strategic CSR is the alignment of a business strategy with a company’s social contributions. This is very specifically planned in order to increase a businesses’ profits. 

Sustainability is the measure of how something can be maintained-it also refers to how eco-friendly some markets are.

A sole proprietorship is a business owned by only one person.

Pros: simplicity, single layer of taxation, privacy, flexibility & control, fewer limitations, personal satisfaction

Cons: financial literacy, demands on owner, limited manager experience, resource limitation, no employee benefits, finite life span

A partnership is a business owned by 2 or more people.

Pros: easy to form, simplicity, single layer of taxation, more resources, cost sharing, more skill and experience base, longevity

Cons: unlimited liability, potential for conflict, expansion, succession, termination

a legal entity (NOT just a person) that can own property and conduct business

ex: C CORPS, S CORPS

Ethos; credibility

Logos; logic

Pathos; feelings

Unlimited liability of a company means the finances of the companies are the direct responsibility of the owners. Any bankruptcy is to be at fault of the owners.

A limited partnership has at least one general partner and one limited partner.

A shareholder is a partial owner of a company.

Liquidity refers to how quickly assets can be turned liquid.

An LLC offers the ability to choose how to be taxed (SP, P, S, or C).

Pros: longevity, liquidity, limited liability, no double taxation, classification of business expenses

Cons: reporting requirements, managerial demands, self-employment tax (only available if taxed as a partnership)

An S Corp is a corporation which has private (not public) stock. when an S Corporation becomes a C Corporation by giving the public shares of stock for the very first time, it is classified as an IPO (initial public offering). 

Pros: liquidity, longevity, limited liability, no double taxation, classification of business expenses

Cons: cost, complexity, reporting requirements, managerial demands, pay requirements, recognition varies from territory to territory

A benefit corporation is a corporation which has an environmental standard to upkeep. If they are eco-friendly, they can be filed as one to gain recognition.

Pros: ability to raise capital, liquidity, longevity, limited liability, shareholders

Cons: cost, complexity, reporting requirements, possible loss of controls

A proxy is the ability to represent someone else in voting.

The board of directors in a company supervises how smoothly everything runs and can demote high-ranking positions if necessary.

A merger happens when two companies combine into a new one.

An acquisition occurs when one company buys another.

A joint venture is when two companies agree to work together to both get to a common goal. This may sometimes include an entirely new project.

A strategic alliance are agreements between two or more businesses to reach a set of objectives while remaining separate.

Incubators are organizations that help startup companies and new entrepreneurs by offering services like management training, office space, and venture capital financing.

A new business of any kind can be considered a startup.

A venture capitalist invests by providing capital to growing businesses that would normally not be able to secure those funds. 

Seed money is the money sent by venture capitalists that support growing businesses. 

Microlenders are mission-based groups who send microfunds for specific groups as venture capitalists.

An angel investor is essentially a venture capitalist but with originally large funds. (They have a high net worth). 

An initial public offering is a share of a company going public for the very first time. 

Crowdfunding is raising money for a project or businesses via the public, usually the internet.

A franchise is a method of distributing products from a franchisor. (Think of restaurants like Taco Bell and Pizza Hut.)

A franchisee is the owner of a franchise.

A franchisor is someone who authorizes the building of franchisors by franchisees.

A vision statement states the current and future goals of an organization, aimed to guide an organization.

A mission statement is essentially the how of the vision statement-it says how the company plans to build.

Corporate goals are separate goals management makes in order to build a successful foundation. They are like a framework to how the company functions.

Market research is determining the general background of the product being sold (demographics) and using that data in order to improve the product. 

Employee motivation are incentives set for employees. This takes into account their energy level. In general, companies want their employee motivation to be highest and as cost-minimal as possible.

Theory X states that people are naturally boring. They are lazy and inefficient, and only stern authority will get them to work in the most efficient way. This method is most appropriate in factory settings where any mistakes can injure someone gravely.

Theory Y states that people are naturally ambitious, and only need a guiding hand to improve. This method is extremely effective in computer science settings. 

Sweatshops are shops that accept workers (forced or not forced) to work for them at little to no cost. They usually mass produce items and work in a factory setting. One of the historically most recognized sweatshops belongs to Nike. They usually take place around the world in less developed areas where there are not as many laws.

Culture is how the people of a business function (the customs and tradition engage in.) 

A company not for profit simply does not function for profit for the owners-instead, it seeks to raise money for a charitable cause.

Revenue is the income a company raises over time, usually obtained by selling their products / services.

Stakeholders is another term for shareholders. These are people who own shares of the company.

Barriers to entries are limitations posed when trying to enter a market. Common barriers to entry include a lack of capital investment, a lack of technology, and a lack to surpass the competitions’ expectations.

A business is a company that sells a product or service to generate profit.

An entrepreneur is a person who seeks to start a business venture. 

A business model is a framework for the business. It is intended to be a guide, and includes a management plan along with a feasibility analysis.

Microeconomics is the study of economics on a smaller scale. It views interactions between small groups.

Macroeconomics is the study of economics on a larger scale. It views interactions worldwide.

Economics is the study of money and how it is exchanged. It also observes how people strive to choose the best choices possible.

Scarcity refers to how rare a product is. If it is not available, it is scarce and will be priced accordingly.

During a recovery, the GDP increases.

Gross domestic product: Consumer spending + investment + government spending +  exports - imports

It measures the value of products produced within a country’s borders. 

The expansion process occurs with positive economic indicators (GDP, employment, consumer confidence) rising. The peak occurs when the economy reaches its maximum. Contraction occurs after the peak, when the economy is stable, although consumer confidence slowly decreases. Finally comes the trough, where the lowest point of the cycle is reached. Then comes expansion, and the process begins again.

Economic indicators are statistics that measure the performance and efficiency of the economy. These include GDP, employment, and consumer confidence.

Cyclical unemployment: unemployment due to fluctuations of the business cycles

Frictional unemployment: when workers leave their jobs but haven’t found new ones

Structural unemployment: when the economy does not demand skills workers possess

A depression is a recession but more severe. It usually lasts for 2 or more years and can be considered a trough of the business cycle.

A recession is a trough in the business cycle which lasts for 6 months or more. 

Recovery is the uplifting an economy experiences after a trough, recession, or depression.

CSR is defined as social contributions a business takes. Usually it is aligned with the company’s vision and mission statements. (For example, technological companies donate to children education facilities).

Demographics are the estimated statistics (age, ethnicity, gender, etc) of a consumer group who buy a product. These are used to further refine the product. 

A marketing mix is the mix of demographics and other factors used to refine a product.

An organizational structure is the framework of a company’s management plan. DECENTRALIZED VS CENTRALIZED? 

An organizational chart is a visual depiction of the organizational structure, usually accompanied by names from the management plan.

A budget surplus happens when revenues exceed the spending of the budget.

Free trade is unregulated trade.

Exports are products a country sends to other countries for trading purposes.

Imports are products countries receive from other countries, via trade, abroad

A business plan is a collection of documents detailing a business and its purpose, functions, and framework. 

A SWOT analysis analyzes the market a business enters, and what factors might effect it.

Strengths, weaknesses, opportunities, and threats.

Problem-solving teams, self-managed teams, cross-functional teams, and virtual teams.

Laissez-faire leadership, democratic leadership, and autocratic leadership.

Theory X states that people are naturally boring. They are lazy and inefficient, and only stern authority will get them to work in the most efficient way. This method is most appropriate in factory settings where any mistakes can injure someone gravely.

Theory Y states that people are naturally ambitious, and only need a guiding hand to improve. This method is extremely effective in computer science settings.