Chapter 1

Question 1

Business

Answer 1

Individuals or organizations who try to earn a profit by providing products that satisfy products that satisfy people’s needs.

Question 2

Product

Answer 2

A good or service with tangible and intangible characteristics that provide satisfaction and benefits.

Question 3

Profit

Answer 3

The difference between what it costs to make and sell a product and what a customer pays for it.

Question 4

Nonprofit organizations

Answer 4

Organizations that may provide goods or services but do not have the fundamental purpose of earning profits.

Question 5

stakeholders

Answer 5

Groups that have a stake in the success and outcomes of a business.

Question 6

Economics

Answer 6

The study of how resources are distributed for the production of goods and services within a social system.

Question 7

Natural resources

Answer 7

land, forests, minerals, water, and other things that are not made by people.

Question 8

Human resources

Answer 8

The physical and mental abilities that people use to produce goods and services; also called labor.

Question 9

Financial resources

Answer 9

The funds used to acquire the natural and human resources needed to provide products; also called capital.

Question 10

Economic system

Answer 10

A description of how a particular society distributes its resources to produce goods and services.

Question 11

Communism

Answer 11

First described by Karl Marx as a society in which the people, without regard to class, own all the nation’s resources.

Question 12

Socialism

Answer 12

An economic system in which the government owns and operates basic industries but individuals own most businesses.

Question 13

Capitalism (free enterprise)

Answer 13

An economic system in which individuals own and operate the majority of businesses that provide goods and services.

Question 14

Free-market System

Answer 14

Pure capitalism, in which all economic decisions are made without gov. intervention.

Question 15

Mixed economies

Answer 15

Economies made up of elements from more than one economic system.

Question 16

Demand

Answer 16

The number of goods and services that consumers are willing to buy at different prices at a specific time.

Question 17

Supply

Answer 17

The number of products–goods and services–that businesses are willing to sell at different prices at a specific time.

Question 18

Equilibrium Price

Answer 18

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.

Question 19

Competition

Answer 19

The rivalry among businesses for consumers’ dollars.

Question 20

Pure Competition

Answer 20

The market structure that exists when there are many small businesses selling one standardized product.

Question 21

Monopolistic Competition

Answer 21

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.

Question 22

Oligopoly

Answer 22

The market structure that exists when there are very few businesses selling a product.

Question 23

Monopoly

Answer 23

The market structure that exists when there is only one business providing a product in a given market.

Question 24

Economic expansion

Answer 24

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.

Question 25

Inflation

Answer 25

A condition characterized by a continuing rise in prices.

Question 26

Economic contraction

Answer 26

A slowdown of the economy characterized by a decline in spending and during which businesses cut back on production and lay off workers.

Question 27

Recession

Answer 27

A decline in production, employment, and income.

Question 28

Unemployment

Answer 28

The condition in which a percentage of the population wants to work but in unable to find jobs.

Question 29

Depression

Answer 29

A condition of the economy in which unemployment is very high, consumer spending is low, and business output is sharply reduced.

Question 30

gross domestic product (GDP)

Answer 30

The sum of all goods and services produced in a country during a year

Question 31

Budget deficit

Answer 31

The condition in which a nation spends more than it takes in from taxes.

Question 32

Entrepreneur

Answer 32

An individual who risks his or her wealth, time, and effort to develop for profit an innovative product or way of doing something.