Chapter 1: Understanding Business Flashcards
Any activity that seeks to provide goods and services to others while operating at a profit.
Business
Business
Any activity that seeks to provide goods and services to others while operating at a profit.
Tangible products such as computers, food, clothing, cars, and appliances.
Goods
Goods
Tangible products such as computers, food, clothing, cars, and appliances.
Intangible products (i.e., products that can’t be held in your hand) such as education, health care, insurance, recreation, and travel and tourism.
Services
Services
Intangible products (i.e., products that can’t be held in your hand) such as education, health care, insurance, recreation, and travel and tourism.
The total amount of money a business takes in during a given period by selling goods and services.
Revenue
Revenue
The total amount of money a business takes in during a given period by selling goods and services.
The amount of money a business earns above and beyond what it spends for salaries and other expenses.
Profit
Profit
The amount of money a business earns above and beyond what it spends for salaries and other expenses.
The amount of goods and services people can buy with the money they have.
Standard of Living
Standard of Living
The amount of goods and services people can buy with the money they have.
All the people who stand to gain or lose by the policies and activities of a business and whose concerns the business needs to address.
Stakeholders
Stakeholders
All the people who stand to gain or lose by the policies and activities of a business and whose concerns the business needs to address.
The study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals.
Economics
The study of how to increase resources and to create the conditions that will make better use of those resources.
Resource Development
The resources used to create wealth: land, labor, capital, entrepreneurship, and knowledge.
Factors of Production
Factors of production
The resources used to create wealth: land, labor, capital, entrepreneurship, and knowledge.
Economic systems in which the government largely decides what goods and services will be produced, who will get them, and how the economy will grow.
Ex: socialism and communism
Command Economies
Economic systems in which the market largely determines what goods and services get produced, who gets them, and how the economy grows. Ex: capitalism
Free-market economies
Economic systems in which some allocation of resources is made by the market and some by the government.
Mixed economies
An economic system based on the premise that some, if not most, basic businesses should be owned by the government so that profits can be more evenly distributed among the people.
Socialism
An economic and political system in which the government makes almost all economic decisions and owns almost all the major factors of production.
Communism
An economic system in which all or most of the factors of production and distribution are privately owned and operated for profit.
Capitalism
4 basic rights people have under free-market capitalism
- The right to own private property
- The right to own a business and keep all that bussines’s profits (after taxes)
- The right to freedom of competition
- The right to freedome of choice
The price determined by supply and demand.
Market price
A degree of competition in which just a few sellers dominate the market.
Oligopoly
The degree of competition in which a large number of sellers produce very similar products that buyers nevertheless perceive as different.
Monopolistic Competition
The total value of final goods and services produced in a country in a given year.
Gross domestic product
A situation in which price increases are slowing (the inflation rate is declining).
Disinflation
A situation in which prices are declining.
Deflation
A situation when the economy is slowing but prices are going up anyhow.
Stagflation
Monthly statistics that measure the pace of inflation or deflation.
Consumer Price Index (CPI)
CPI minus food and energy costs.
Core Inflation
An index that measures the change in prices at the wholesale level.
Producer Price Index (PPI)
What are the 3 economic indicators?
- GDP
- Unemploymeny rate
- Price Indexes
Two or more consecutive quarters of decline in the GDP.
Recession
A severe recession, usually accompanied by deflation.
Depression
The federal government’s efforts to keep the economy stable by increasing or decreasing taxes or government spending.
Fiscal policy
The management of the money supply and interest rates by the Federal Reserve Bank.
Monetary policy
