Understanding Economic Systems
and Business
1.1 The Nature of Business
1. How do businesses and not-for-profit organizations help
create our standard of living?
BUSINESS
1. businesses create the goods and services that are the basis of our standard of living.
2. Businesses play a key role in determining our quality of life by providing jobs and
goods and services to society
Not-for-Profit Organizations
1. is an organization that exists to achieve some goal other than the usual business
goal of profit
Factors of Production: The Building Blocks of Business
1. Natural resources
2. Human resources
3. Capital
4. Entrepreneurship – combine factors of production to to produce G/S with intention of profit
5. Knowledge
Definitions
1. business is an organization that strives for a profit by providing goods and services
desired by its customers.
2. standard of living of any country is measured by the output of goods and services
people can buy with the money they have.
3. Quality of life refers to the general level of human happiness based on such things
as life expectancy, educational standards, health, sanitation, and leisure time.
4. Risk is the potential to lose time and money or otherwise not be able to accomplish
an organization’s goals.
4.2 Understanding the Business Environment
Managers can control internal operations in a business but external environment is out of
their control so they must study it and adapt to be successful.