Introduction to Business
Final Exam Study Guide
2010
Chapter 1
• Wants – things you can live without
• Needs – things you cannot live without
• Service Business
– Hair care, doctor, lawyer
• Scarcity
– Not enough resources to satisfy every need
Chapter 1
• The Rational Decision Making Process
– Specify
– Search
– Sift
– Select
– Study
Chapter 1
• Opportunity Cost
– The value of the next best alternative
• Impulse Purchase
– Buying on a whim
Chapter 1
• Types of Economies
– Command (Government is in charge)
– Market (People are in charge)
– Traditional (things are done the same for
generations)
– Mixed = Market + Command
Chapter 1
• Law of demand:
– As prices goes up, demand goes down
• Principles of US Economy
– Private property (own use and dispose of things)
– Freedom of choice (can make own decisions but
must accept consequences)
– Profit (Price – Cost)
– Competition (contest among sellers to win
customers)
Chapter 15
• Government Agencies
– USDA – inspect and grades meat products
– FTC – protects against unfair business practices
– CPSC – protects consumers from dangerous
products
– FDA – regulates food and prescription drugs
Chapter 15
• Types of advertising
– Persuasive (appeals to emotions)
– Informative (educates you)
– Puffery (legal exaggeration)
Chapter 15
• Right to be informed
– Businesses must provide accurate information
– Read labels
• Right to Safety
– Products cannot harm
– Follow directions
Chapter 15
• Right to choose
– Businesses must provide a variety
– Use the 5 S’s
• Right to be heard
– Government must listen to consumers
– Tell the government
• Right to remedy
– Businesses must provide solutions
– Go back to business and ask for refund or exchange
Chapter 15
• Right to Consumer education
– Information or classes must be available
– Take classes
• Right to Service
– Businesses must be respectful
– Go back to businesses that are respectful
Chapter 15
• Monopoly
– Company that has an unfair advantage over other
businesses
• Complaint process
– Go back to the seller
– Write the manufacturer
– Go to the Better Business Bureau (BBB)
– File a lawsuit
Chapter 15
• Arbitration
– Third party that resolves a dispute between a
consumer and business. The decision is legally
binding
• Mediation
– Third party that attempts to resolve a dispute
between a consumer and business. Their decision
is not legally binding
Chapter 15
• Class Action Lawsuit
– When a lawsuit is filed on behalf of many people
against one business.
• Guaranty
– Company’s promise that products will work or
they will fix it
• Implied Warranty
– Unwritten guarantee
Chapter 15
• Brand
– Name given to a product to distinguish it from
other products
Chapter 16
• Budget
– Plan for dividing income among saving and
spending
• Advantages of a financial plan
– Reduces uncertainties
Chapter 16
• Assets
– Things you owe
• Liabilities
– Things you own
• Net worth = Assets – liabilities
• If net worth is 8,000 and liabilities is 5,000
what are assets?
Chapter 16
• Fixed Expenses
– Savings
– Rent
– Cell phone bill
• Variable Expenses
– Going out to eat
– Going to the movies
– shopping
Chapter 16
• Successful budgets are
– Realistic and flexible
• Pay yourself first means
– Put money in savings before spending on anything
else
• Living within your income means that you
don’t spend more than you earn
Chapter 16
• Most uncertain aspect of budgeting is
– Estimating variable expenses
• Most common source of retirement is
– Social security
Chapter 9
• Mobility
– Willingness to move where the jobs are
• Talent
– Natural ability to do certain things
• Purpose of a cover letter
– to get you the interview
• Reference
– People who can report on your character
Chapter 9
• Ways to prepare for an interview
– Dress appropriately
– Be on time
– Practice questions
– Go alone
Chapter 9
• Good source that gives in-depth information
on hundreds of occupations
– Occupational Outlook Handbook
• Values
– Things that are important to you
• Interview
– Face-to-face meeting with a potential employer to
see if you are a good fit for a job
Chapter 9
• It is important to leave a job on good terms
because you might want to use them as a
reference for a future job
• Job success strategies
– Ask questions
– Don’t be late
– Don’t complain
– Honor break times
– Be friendly to everyone
Chapter 9
• Civil Rights Act of 1964 prohibits job
discrimination for these five areas
– Race
– Color
– National origin
– Religion
– gender