EL 2 The Environment of Business Management Study Guide

The external environment of business refers to:

• factors outside the business that affect its operations

• the internal policies of a business

• the employees working within the business

• the products and services offered by the business

The three main economic systems are ________, and most countries use which one?

• traditional, command, and market; most countries use a mixed system

• capitalist, socialist, and feudal; most countries use a feudal system

• barter, trade, and industrial; most countries use a barter system

• planned, free, and communal; most countries use a communal system

In a market economy, the decisions about what gets produced are made by:

• the government

• consumers and producers

• a central planning committee

• non-profit organizations

Competition benefits consumers by:

• Offering lower prices and better choices, like different brands of smartphones.

• Making products more expensive for everyone.

• Reducing the number of choices available to consumers.

• Forcing everyone to buy the same product.

Globalization is the process that connects countries and affects the products you use by:

• Allowing products from different countries to be available in your market.

• Making all products in your country locally produced.

• Preventing international trade and exchange.

• Limiting the variety of products you can buy.

A contract has three key parts. Which of the following lists them correctly, and gives an example relevant to a teenager?

• Offer, acceptance, and consideration; for example, agreeing to mow a neighbor's lawn for payment.

• Intention, negotiation, and agreement; for example, borrowing a book from a friend.

• Promise, signature, and witness; for example, signing a birthday card.

• Discussion, payment, and delivery; for example, buying lunch at school.

Contracts are important for both businesses and individuals because:

• they provide legal protection and clarify obligations.

• they are only used for large companies.

• they are not legally binding.

• they are only necessary for international deals.

Compliance means following rules and regulations; which two areas must businesses follow?

• Legal and ethical areas

• Marketing and entertainment

• Fashion and sports

• Travel and leisure

A business can face which of the following consequences if it doesn’t comply with laws and regulations?

• It can face legal penalties or fines.

• It will automatically increase profits.

• It will be exempt from taxes.

• It will receive government rewards.

Consumer protection is important for ensuring the rights of buyers. Which of the following lists the four basic consumer rights?

• Right to safety, right to be informed, right to choose, right to be heard

• Right to privacy, right to education, right to vote, right to work

• Right to property, right to assemble, right to travel, right to speech

• Right to equality, right to religion, right to justice, right to freedom