Chapter 1: The Contemprary Business World. Flashcards
Business
Organization that provides goods or services to earn profits.
Profits
Difference between a business’s revenues and its expenses.
External Environment
Everything outside an organizations boundaries that might affect it.
Economic System
A nations system for allocating its resources among its citizens.
Factors of Production
Resources used in the production of goods and services.
Planned Economy
Economy that relies on a centralized government to control all our most factors of production and to make all or most production and allocation decisions.
Mixed Market Economy
Economic system featuring characteristics of both planned and market economies.
Privatization
Process of converting government enterprises into privately owned companies.
Demand
The willingness and ability of buyers to purchase a good or services.
Supply
The willingness and ability of producers to offer a good service for sale.
Private Enterprise
Economic system that allows individuals to purse their own interests without undue government restrictions.
Private Property Rights
Ownership of the resources used to create wealth is in the hands of individuals.
Freedom of Choice
You can sell your labor to any employer you choose.
Profits
The lure of profits and freedom leads some people to abandon the security of working with someone else and to assume the risks of entrepreneurship.
Perfect competition
Exist when all industries are small and the number of firms in the industry must be large.
