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SM131 Midterm one Exam Questions with correct Answers 2024/2025( A+ GRADED 100% VERIFIED).
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SM131 Midterm oneAuthoritarian political systems
Power is controlled by a small group of people
Define Democracy
Government operating on the consent of the people being governed
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What does a political system have to do with Businesses?
The way that businesses are managed and financed is depending solely on the system that
they are in. The systems determine the challenges one business faces. Regulations and
policies impact and influence businesses decisions and operations
What do you do? Do all businesses need to succeed?
Businesses need stability and strong legal systems
What is Feudalism?
Decentralized Socio-political system that ranks people by career/profession.
Who helped transform Modern Capitalism and economies, and what did he believe in?
John Locke with : Property rights and Free Trade
,How can people contribute to the overall well being of an Economy
By pursuing people's own self interests people contribute to the overall well being of the
economy
What is division of labor?
The specialization of the butcher, brewer, and baker in their respective trades allows them to
become more skilled and efficient in their production processes. This specialization enhances
productivity and contributes to economic growth, as individuals focus on tasks where they have
comparative advantages.
What is the free labor market?
a system allowing individuals to move and seek better opportunities to sell their labor to the
highest bidder. Second was the right to private ownership and control of property. Skilled
workers and entrepreneurs could accumulate wealth and improve their social standing based on
merit and innovation rather than birthright. This shift allowed people to move geographically and
provided class mobility.
Describe a capitalist economy?
Firms operate in a market driven economy where private ownership and control of property and
individual choice is preserved
What are the problems with capitalism?
Harsh working conditions, child labor and little job security. Cycles of boom or bust, leading to
instability
What are they key principals of Socialism?
Collective ownership of the means of production (collective property rights): By advocating for
the collective (community) ownership and control of the means of production, which includes
factories, land, and resources, socialism aims to address wealth and income inequalities that
result in capitalist economies.
Workers' Rights: Socialism aimed to protect workers' rights, using means such as fair wages,
safe working conditions, the right to unionize
Social Welfare: Socialism prioritizes social welfare programs to provide a substantial and robust
safety net for all citizens,
Role of Government: Instead of relying on market forces, socialism confers a greater role to
government
What were some of the problems with capitialism
,Often has issues with incentives for people to work harder
Governments were seen to have little resistance to change and were slow
The concentration of economic power in the hands of the state can hinder political freedom
What are mixed economies?
Mixed economies employ both the tactics of a capitalist and a socialist economy.
The mixing is also affected by the system in which it occurs in and how much the government is
involved in the system
What are the features of mixed economies?
Mixed economies use the efficiency of markets to allocate resources through the principles of
supply and demand
Profit motive of capitalism still drives innovation
Social welfare programs exist to add a socialism element
Government's regulation insures a safety net for all citizens
Pensions, Social Security
Almost every country operates in what type of economy?
Mixed Economy.
How are markets and the role of government defined in a mixed economy
Markets: Capitalism
Government: Socialism
What is the foundation of all economic activities?
Moral and ethical values are at the foundation of economic activity
What is the labor theory of value?
That all value in produced goods comes from labor. The value of any item is determined by the
necessary labor time to produce that item. Designed by Karl Marx. The labor theory relies on
the ideas of Objective features
What does Adam Smith think of economic value?
Labour is the real measure of the exchangeable value of all commodities, what everything really
costs to the man who is trying to buy it
, What did William Petty and Richard Cotillion argue about value?
Petty argued that the natural value of goods was based on the amount of land and labor that is
required to make that good
Cantillon argued that the value of the good was based on land alone
Define the subjective approach to economic value
Shaped by a combination of the usefulness of a product or service to its potential buyers and by
the preferences of those buyers
Was seen to be closest to a the labor theory
Define Marginal Revolution
Used math, specifically calculus to create abstract and formal theories in which economic value
was determined subjectively
Subjective theory of value and the analytical notion of marginal utility.
How does modern economics and business recognize the value of goods and services?
Overall, modern economics and business recognize that the economic value of goods and
services is not directly determined by innate features of products or the number of labor hours
that went into making them but by the complex interplay of social, economic, and moral
processes that lead individual or business consumers to derive utility from those goods and
services
What is the Porter Value Chain?
The Porter value chain is an approach to understanding the ways in which firms create and
capture value
Creates two categories, primary activities and support activities
When they are aligned and work together to address the demands of the firm's competitive
environment.
Porter Value Chain highlights the internal choices made by a firm and notes how those relate to
the economic actors outside of the firm's boundaries
What are the Primary Activities in the PVC?
Primary Activities
Inbound logistics: Receiving, Storing, and distributing inputs including material handling,
warehousing, inventory control and
Operations: The transformation of inputs into final products
Outbound logistics: Activities relating to the distribution of final products to customers, such as
fulfillment, transportation, and distribution management
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