Chapter 1-3 Flashcards
business
any organization or activity that provides goods and services in an effort to earn a profit
profit
the money that a business earns in sales (or revenue), minus, expenses, such as the cost of goods and the cost of salaries
loss
when a business incurs expenses that are greater than it’s revenue
entrepreneur
people who risk their time, money, and other resources to start and manage a business
standard of living
the quality and quantity of goods and services available to a population
quality of life
the overall sense of well-being experienced by either an individual or a group
nonprofits
business-like establishments that employ people and produce goods and services with the fundamental goal of contributing to the community rather than generating financial gain
factors of production
four fundamental elements-natural resources,capital,human resources, and entrepreneurship-that businesses need to achieve their objectives
business environment
the setting in which business operates. the five key components are economic environment, competitive environment, technological environment, social environment, and global environment.
business technology
any tools-especially computers, telecommunications, and other digital products-that businesses can use to become more efficient and effective
value
businesses have to explain why you need the product, and why it’s priced that way
economy
a financial and social system of how resources flow through society, from production to distribution, to consumption
economics
the study of the choices that people, companies, and governments make in allocating society’s resources
macroeconomics
the study of a country’s overall economic dynamics, such as the employment rate, the gross domestic product, and taxation policies
microeconomics
the study of smaller economic units such as individual consumers, families, and individual businesses
gross domestic product
the total value of all final goods and services produced within a nation’s physical boundaries over a given period of time
economic system
a structure for allocating limited resources
capitalism
an economic system-also known as the private enterprise or free market system-based on private ownership, economic freedom, and fair competition
supply
the quantity of products that producers are willing to offer for sale at different market prices
demand
the quantity of products that consumers are willing to buy at different market prices
socialism
an economic system based on the principle that the government should own and operate key enterprises that directly affect public welfare
communism
an economic and political system that calls for public ownership of virtually all enterprises, under the direction of a strong central government
mixed economies
economies that emo body elements of both planned and market-based economic systems
opportunity cost
the opportunity of giving up the second-best choice when making a decision
absolute advantage
the benefit a country had in a given industry when it can produce more of a product than other nations using the same amount of resources
comparative advantage
the benefit a country has in a given industry if it can make products at a lower opportunity cost than other countries
balance of trade
a basic measure of the difference in value between a nation’s exports and imports, including both goods and services
trade surplus
overage that occurs when the total value of a nation’s exports is higher than the total value of its imports
trade deficit
shortfall that occurs when the total value of a nation’s imports is higher than the total value of its exports
sociocultural differences
differences among cultures in language, attitudes, and values
infrastructure
a country’s physical facilities that support economic activity
protectionism
national policies designed to restrict international trade, usually with the goal of protecting domestic businesses
tariffs
taxes levied against imports
quotas
limitations on the amount of specific products that may be imported from certain countries during a given time period
exchange rate
a measurements of the value of one nation’s currency relative to the currency of other nations
countertrade
international trade that involves the barter of products for products rather than for currency
foreign outsourcing
(also contract manufacturing) contracting with foreign suppliers to produce products, usually at a fraction of the cost of domestic production
importing
buying products domestically that have been produced or grown in foreign nations
exporting
selling products in foreign nations that have been produced or grown domestically
embargo
a complete ban on international trade of a certain item, or a total halt in trade with a particular nation
free trade
the unrestricted movement of goods and services across international borders
world trade organization (wto)
a permanent global institution to promote international trade and to settle international trade disputes
