Chapter 1 Flashcards
Business
Individuals or organizations who try to earn a profit by providing products that satisfy products that satisfy people’s needs.
Product
A good or service with tangible and intangible characteristics that provide satisfaction and benefits.
Profit
The difference between what it costs to make and sell a product and what a customer pays for it.
Nonprofit organizations
Organizations that may provide goods or services but do not have the fundamental purpose of earning profits.
stakeholders
Groups that have a stake in the success and outcomes of a business.
Economics
The study of how resources are distributed for the production of goods and services within a social system.
Natural resources
land, forests, minerals, water, and other things that are not made by people.
Human resources
The physical and mental abilities that people use to produce goods and services; also called labor.
Financial resources
The funds used to acquire the natural and human resources needed to provide products; also called capital.
Economic system
A description of how a particular society distributes its resources to produce goods and services.
Communism
First described by Karl Marx as a society in which the people, without regard to class, own all the nation’s resources.
Socialism
An economic system in which the government owns and operates basic industries but individuals own most businesses.
Capitalism (free enterprise)
An economic system in which individuals own and operate the majority of businesses that provide goods and services.
Free-market System
Pure capitalism, in which all economic decisions are made without gov. intervention.
Mixed economies
Economies made up of elements from more than one economic system.
Demand
The number of goods and services that consumers are willing to buy at different prices at a specific time.
Supply
The number of products–goods and services–that businesses are willing to sell at different prices at a specific time.
Equilibrium Price
The price at which the number of products that businesses are willing to supply equals the amount of products that consumers are willing to buy at a specific point in time.
Competition
The rivalry among businesses for consumers’ dollars.
Pure Competition
The market structure that exists when there are many small businesses selling one standardized product.
Monopolistic Competition
The market structure that exists when there are fewer businesses than in a pure-competition environment and the differences among the goods they sell are small.
Oligopoly
The market structure that exists when there are very few businesses selling a product.
Monopoly
The market structure that exists when there is only one business providing a product in a given market.
Economic expansion
The situation that occurs when an economy is growing and people are spending more money; their purchases stimulate the production of goods and services, which in turn stimulates the employment.
