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RSM100 Midterm 1 Prep
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RSM100 Midterm 1 Prep
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RSM100 Midterm 1 PrepWhat is "The Wealth of Nations"? - ANS-foundation document for capitalism, free
enterprise, free trade and wealth creation
Who is Adam Smith? - ANS-The "father of capitalism", author of "The Wealth of
Nations"
What is money? - ANS-A measure of value
When will one hire someone else to do labour for them? - ANS-cost of service < cost of
own labour
What is "Market Price"? - ANS-The actual price at which any commodity is commonly
sold
Why is setting a common wage difficult to settle? - ANS-Workmen desire to get as much
money as possible, masters desire to give as little as possible
What does Adam Smith mean by the "invisible hand"? - ANS-people will work jobs they
may not want to if they see a way that this will enrich their own lives ~ people are
self-motivated if they see possibility for future gain
What were Adam Smith's warnings? - ANS-Make sure the rich do not affect politics
What is the issue with unrestrained capitalism? - ANS-results in concentrations of
wealth and power
Does Adam Smith believe in 'laissez-faire' capitalism? - ANS-No, capitalism needs to be
regulated and enforced
What is "business"? - ANS-all profit-seeking activities and enterprises that provide
goods and services necessary to an economic system
What are "profits"? - ANS-rewards for business-people who take risks involved in
offering goods and services to customers
How do profits serve as incentives? - ANS-Are incentives for people to start companies,
expand them and provide consistently high-quality competitive goods and services
,What is a "Not-for-profit organization"? - ANS-organizations whose primary aims are
public service, not returning a profit to their owners
What are "factors of production"? - ANS-the 4 basic inputs for effective economic
operations
What are the 4 factors of production? - ANS-Natural resources, capital, human
resources, entrepreneurship
What are "natural resources"? - ANS-all production inputs that are useful in their natural
states
What are building sites and forests an example of? (factor of production) - ANS-Natural
Resources
What is "capital"? - ANS-production inputs consisting of technology, tools, information
and physical facilities
What are "human resources"? - ANS-production inputs consisting of anyone who works,
including both the physical labour and the intellectual inputs contributed by workers
Do human resources just include the 'physical labour'? - ANS-No, includes both
physical labour and intellectual inputs
What is "entrepreneurship"? - ANS-the willingness to take risks to create and operate a
business
What type of economic system does Canada operate under? - ANS-Private enterprise
system
What is a "private enterprise system"? - ANS-an economic system that rewards firms for
their ability to identify and serve the needs and demands of customers
What is "competitive differentiation"? - ANS-the combination of organizational abilities,
products and approaches that sets one company apart from its competitors in the minds
of customers
What are the 4 basic rights under a private enterprise system? - ANS-Competition,
private property, freedom of choice, profits
,What is "private property"? - ANS-the right to own, buy, use, sell and hand down land,
buildings, machinery, individual possessions and various intangible property
What is "freedom of choice"? - ANS-a private enterprise relies on citizens to choose
their own employment purchases and investments
What is "consumer orientation"? - ANS-a business philosophy that focuses first n
consumers' unmet wants and needs, and then designs products to meet those needs
What is "branding"? - ANS-the process of creating in consumers minds an identity for a
good, service or company
What is "transaction management"? - ANS-building and promoting products in the hope
that enough customers will buy them to cover the costs and earn profits
What is "relationship management"? - ANS-the collection of activities that build and
maintain ongoing, mutually beneficial ties with customers and other parties
What is the "relationship era"? - ANS-the business era where firms seek to actively
promote customer loyalty by carefully managing every interaction
What is the advantage of keeping customers over a long term? - ANS-reduces
advertising and sales costs
Why do customers seek loyal customers (2)? - ANS--Typically don't need to offer price
discounts
-new customers referred by loyal customers
What are the advantages of 'relationship management'? (2) - ANS--serving existing
customers is less costly than trying to attract new customers
- can improve a businesses understanding of what customers want and prefer from the
company
What is the "social era"? - ANS-the business era in which firms seek ways to connect
and interact w/ customers using technology
What is "strategic alliance"? - ANS-a partnership formed to create competitive
advantage for the businesses involved
, What is "offshoring"? - ANS-moving of business processes to a lower cost location
overseas
What is "outsourcing"? - ANS-When a company contracts a specific process out to a
3rd party, finding someone who specializes in it
Outsourcing vs. Offshoring? - ANS-Outsourcing - buys from a 3rd party a part or service
Offshoring - sending jobs out of country
What is "near-shoring"? - ANS-outsourcing of production or services to locations near a
firms home base
What is "critical thinking"? - ANS-the ability to analyze and assess information to
pinpoint problems or opportunities
What are "business ethics"? - ANS-the standard of conduct and moral values involved
in decisions made in the work environment
What is "social responsibility"? - ANS-a business's consideration of society's well being
and consumer satisfaction in addition to profits
What characteristics do "mixed market economy"s have? (3) - ANS--regulations
- public and private ownership
-gov't can have private businesses
What is "wealth"? - ANS-an abundance of material possesions and resources; property
that has economic utility
Who was and now is Canada's main trading partner? - ANS--Past = UK
-Present = US
What is wealth mainly derived from in Canada? - ANS-trade (w/US)
What are the 3 types of nations? - ANS--Industrialized
-Emerging Economies
-Developing
Where is the best example of "emerging economy" nations? - ANS-BRIC (Brazil,
Russia, India, China)
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