Chapter 1 Flashcards
Free enterprise
Freedom to decide what to produce, how to produce it, and decide how to sell it
Recognizing and respecting the differences among people
Cultural (workplace) diversity
Person who assumes risk and is responsible or the business
Business owner
Most important resource of a company
Employee
One who has the decision to purchase the products
Customer
4 resources of business
- Material resources
- Human resources
- Financial resources
- Informational resources
Three organizations (types) of business
- Service business
- Manufacturing business
- Marketing intermediaries
Three organizations (types) of business
- Service business
- Manufacturing business
- Marketing intermediaries
Marketing intermediaries
Businesses that buy from a vendor then sell the products to a customer
The organized effort of individuals to produce and sell, for profit the goods and services that satisfy society’s need
Business
What remains after all business expenses have been deducted from sales revenue
Profit
All the different people or groups of people who are affected by an organizations policies, decisions, and activities
Stakeholder
The study of how wealth is created and distributed
Economics
The study of the decisions made by individuals and businesses
Microeconomics
The study of the national economy and the global economy
Macroecomics
The way in which people deal with the creation and distribution of the wealth
Economy
The inputs and resources used to produce goods and services
Factors of production
A person who risks time, effort, and money to start and operate a business
Entrpreneur
An economic system in which individuals own and operate the majority of businesses that provide goods and services
Capitalism
A term created by Adam Smith to describe how an individual’s personal gain benefits others and the national economy
Invisible hand
An economic system in which businesses and individuals decide what to produce and buy, and the market determines prices and the quantity sold
Market economy
An economy that exhibits elements of both capitalism and socialism
Mixed economy
Goods and services purchased by individuals for personal consumption
Consumer goods
An economic system in which the government decides what goods and services will be produced, how they will be produced, for whom available goods and services will be produced, and who owns and controls the major factors of production
Command economy
The average level of output per worker per hour
Productivity
The total dollar value of all goods and services produced by all people within the boundaries of a country during a specified time period (usually a one year period)
Gross domestic product (GDP)
A general rise in the level of prices
Inflation
A general decrease in the level of prices
Deflation
The percentage of a nation’s labor force unemployed at any time
Unemployment rate
The monthly index that measures the changes in prices of a fixed basket of goods purchased by a typical consumer in an urban area
Consumer price index (CPI)
A monthly index that measures prices that producers receive for their finished goods
Producer price index (PPI)
The recurrence of periods of growth and recession in a nation’s economic activity
Business cycle
Two or more consecutive three-month periods of decline in a country’s GDP
Recession
A severe recession that lasts longer than a typical recession and has a larger decline in business activity when compared to a recession
Depression
Federal reserve’s actions to promote maximum employment, stabilize prices, and increase or decrease interest rates
Monetary policies
Government influence on the amount of savings and expenditures; accomplished by altering the tax structure and by changing the levels of government spending
Fiscal policy
A shortfall created when the government spends more in a fiscal year than it recieves
Federal deficit
The total of all federal deficits
National debt
Rivalry among businesses for sales or potential customers
Competition
The market situation in which there are many buyers and sellers of a product, and no single buyer or seller is powerful enough to affect the price of that product
Perfect competion
The quantity of a product that producers are willing to sell at each various prices
Supply
The quantity of a product that buyers are willing to purchase at each of various prices
Demand
The price at which the quantity demanded is exactly equal to the quantity supplied
Market price
A market situation in which there are many buyers along with a relatively large number of sellers who differentiate their products from the products of competitors
Monopolistic competition
The process of developing and promoting differences between a company’s products and all competitive products
Product differentiation
A market (or industry) in which there are few sellers
Oligopoly
A market (or industry) with only one seller, and customers can only buy the product or service from that one seller
Monopoly
A loose, subjective measure of how well off an individual or society is , mainly in terms of want satisfaction through goods and services
Standard of living
A method of manufacturing in which an entrepreneur distributed raw materials to various homes, where families would process them into finished goods to be offered for sale by the entrepreneur
Domestic system
A system of manufacturing in which all materials, machinery, and workers required to manufacture are assembled in one place
Factory system
The separation of a manufacturing process into distinct tasks and the assignment of different tasks to different individuals
Specialization
An economy in which more effort is devoted to the production of services than to the production of goods
Service economy
The online interaction that allows people and businesses to communicate and share ideas, personal information, and information about products or services
Social media
The ability to create and maintain conditions under which present and future generations can exist in productive harmony, and permit fulfilling the social, economic, and other requirements of future generations
Sustainability
