Econ chapter 5 and 6

• Entrepreneurship


  The capacity and willingness to develop, organize, and manage a business venture along with any of its risks to make a profit
• Entrepreneurs come from all types of backgrounds and create all kinds of businesses
• People from all ages may choose to become entrepreneurs
• Entrepreneurs try to identify the needs of the marketplace and to meet those needs by supplying a service or product
• When entrepreneurs succeed, their businesses flourish, and the profits go to them
• Entrepreneur (to an economist)


  One who brings resources, labor, materials, and other assets into combinations that make their value greater than before, and one who introduces change, innovations, and a new order
• Entrepreneur (to a businessman)


  A threat, an aggressive competitor or an ally, a source of supply, a customer, or someone who creates wealth for others, as well as finds better ways to utilize resources, reduce waste, and produce jobs that others are glad to get
• Entrepreneurship


  The dynamic process of creating incremental wealth by individuals who assume the major risks in terms of equity, time, and/or career commitment, or provide value for some product or service
• Entrepreneurship


  The process of creating something new with value by devoting the necessary time and effort, assuming the accompanying financial, psychic, and social risks, and receiving the resulting rewards of monetary and personal satisfaction and independence
• Entrepreneurs


  • They assume risks
  • They are different from employees
• Employees


  People who work for someone else
• Both entrepreneurs and employees may make decisions, but only the entrepreneur is directly affected by the consequences of those decisions
• Inventors


  People who create something for the first time, highly driven individuals motivated by their own work and personal ideas
• There is great confusion about the nature of an entrepreneur versus an inventor
• Dynamic process of creating incremental wealth 


  Entrepreneurship
• People who works for someone

  Employees
• People who create something for the first time. Highly driven individuals motivated by their own work and ideas

  Inventors
• A free-thinker, a problem-solver able to reduce complex problems to simple ones and willing to take risks

  Inventor
• Types of entrepreneurial business

  Manufacturing

  Wholesaling

  Retailing

  Service
• What are the 8 characteristics of successful entrepreneur

  Are independent

  Are self-confident

  Have determination and perseverance

  Are goal-oriented

  Know what they want

  Have a need to achieve and set high standards for themselves

  Are creative

  Able to act quickly
• 4 advantages of entrepreneurship

  Are their own bosses

  Can choose a business that interests them

  Can be creative

  Can make lots of money
• 4 disadvantages of entrepreneurship

  Entrepreneurship are risky

  Entrepreneur face uncertain and irregular incomes

  Work long hours

  Make all decisions by themselves
• The entrepreneurial process have 4 distinct phases

  Identification and evaluation of the opportunity

  Development of business plan

  Determination of the required resources

  Management of the resulting enterprise
• A process of pursuing a new venture

  Entrepreneurial process
• • Must be developed in order to exploit the defined opportunity and very time consuming phase
  • It is essential in developing the opportunity and determining the responsibility required
  • Successful managing thr resulting venture

  Good Business Plan
• Involves more than jdut increasing per capita output and income 


  Entrepreneurship in economic
• What are the two kinds of investments

  Direct Investments

  Indirect Investments
• A study of whatever is right and good for humans

  Ethics
• • Use of funds o aquire capital goods
  • Vital for economic development and growth
  • Use of saving to become future income

  Investment
• Items that are necessary to produce other goods and services

  Capital goods
• Under Direct Investments are:

  Business Investments (buying of small business)

  Real estate (buying of lands, homes and rental properties)
• Under indirect Investments are:

  Savings account (common kind of investment)

  Bonds (a government securities and corporate bonds, pays certain rate over certain period)

  Stocks (have two types)

  • Common stocks (represent shares of ownership in a company)
  • Preferred stock (promised a fixed rate of return, face less risk than common stocks, habe no legal rights to force corpo to pay them)

  Mutual funds (companies may invest in variety of securities and sell shares)

  Life insurance (financial protection)
• In late 1990s and early 2000s, buying of stocks are electronically. Online investing also called


  Electronic trading or e-trading
• • What they have to pay to use something that belongs to someone else
  • A payment of factor of production in excess of its opportunity cost

  Rent
• What are the 4 types of rent?

  Inframarginal Rent

  The economic rent

  Quasi rent

  Monopoly rent
• Comes from word "infra" means under, "marginal" means margin or the end or lastit is a quasi rent that earned by perfectly competitive firm in the short run

  Inframarginal Rent
• Any payment made to a factor of production or anything that is fixed in supply

  Pure economic rent
• Earn no profit because they sell products for what they cost to produce it

  Quasi rent
• Payment from monopolist that are more than thw minimin that firms would accept

  Monopoly rent
• Actively looking for employment, is unable to find work

  Unemployment