chapter 1 Flashcards
Profit
What remains after a businesses expenses are subtracted from its sales revenues.
Not-for-profit organization
an organization that provides a good or service to customers but does not seek to make a profit while doing so.
economic system
the way in which a nation allocates its resources among its citizens
factors of production
the resources used to produce goods and services: labour, capital, entrepreneurs, natural resources and information
capital
the funds required to start a business and keep it running
command economy
an economic system in which government controls all or most factors of production and makes all or most production decisions includes communism and socialism
market economy
an economic system in which individuals control all or most factors of production and make all or most production decisions
communism
a type of command economy in which the government owns and operates all industries
input market
firms buy the resources they need in the production of goods and services
output market
firms supply goods and services in response to demand on the part of consumers
socialism
government owns and operates only select major industries, smaller business like clothing stores and restaurants might be privately owned, large portion of people work for government but have right to choose, high taxes.
capitalism
an economic system in which markets decide what, when and for whom to produce, allows private ownership of the factors of production and encourages entrepreneurship by offering profits as incentive
mixed market economy
economic system with elements of both command economy and a market economy which in practice is typical of most nations economies
privatization
the transfer of activities from the government to the private sector
deregulation
reduction in number of laws affecting business activity and in the powers of governmental enforcement agencies
