Chapter 1 Flashcards
Business
an organization that seeks profit by offering products (goods and services) to satisfy society’s needs
Competition
rivalry among businesses for sales to potential customers
Command Economy
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
Consumer Price Index (CPI)
a monthly index that measures the changes in the prices of a fixed basket of goods and services purchased by a typical consumer in an urban area
Deflation
an economics statistic that tracks the decrease in prices of goods and services over a period of time
Demand
the quantity of a product that buyers are willing to purchase at each of various prices
Economic system
a combination of policies, laws, and choices made by governments
Economy
the way in which people deal with the creation and distribution of wealth
Environmental scan
the process of gathering information about the external environment to determine how it may potentially impact the business’s operations
Equilibrium price
the price at which the quantity demanded is exactly equal to the quantity supplied
Factors of production
the resources used to create goods and services, including natural resources, capital, labour, entrepreneurship, and knowledge
Game theory
used to model the interaction between two or more businesses to determine what will happen if one or more companies take specific actions with regard to changing prices or introducing new products or services
Good
a physical, tangible product that we can see and touch
Gross domestic product (GDP)
the total dollar value of all goods and services produced by all people within the boundaries of a country during a one-year period
Inflation
an economic statistic that tracks the increase in prices of goods and services over a period of time
Market economy
an economic system based on competition in the marketplace in which individuals own and operate the majority of businesses that provide goods and services
Mixed economy
an economic system where most land and business are privately owned but with various levels of government involvement
Monopolistic competition
a market situation in which there are many buyers along with a relatively large number of sellers that differentiate their products from the products of competitors
Monopoly
a market (or industry) with only one seller and barriers to keep other companies from entering the industry
Oligopoly
a market (or industry) in which there are few sellers
Perfect (pure) 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
Products differentiation
the process of developing and promoting differences between one’s products and all competitive products
Quality of life
the general well-being and happiness of people and societies; includes measuring such things as access to healthcare, education, and food
Recession
two or more consecutive three-month periods of decline in a country’s GDP
Service
an intangible product that we experience or use
Socialism
an economic system in which infrastructure is owned and controlled by the government
Standard of living
the amount of products available, the wealth of the nation, and lifestyle opportunities
Supply
the quantity of a product that producers are willing to sell at each of various prices
Unemployment rate
the percentage of a country’s labour force unemployed at any time; calculated as the number of unemployed divided by the number of people currently in the labour force
