chapters 1-6 Flashcards
free enterprise
the system of business in which individuals are free to decide what to produce, how to produce it, and at what price to sell it
cultural/workplace diversity
differences among people in a workforce owing to race, ethnicity, and gender
business
the organized effort of individuals to produce and sell, for a profit, the goods and services that satisfy society’s needs
e-business
the organized effort of individuals to produce and sell for a profit, the goods and services that satisfy society’s needs through the facilities available on the internet
profit
what remains after all business expenses have been deducted from sales revenue
stakeholders
all the different people or groups of people who are affected by an organization’s policies, decisions, and activities
economics
the study of how wealth is created and distributed
microeconomics
the study of the decisions made by individuals and businesses
macroeconomics
the study of the national economy and the global economy
economy
the way in which people deal with the creation and distribution of wealth
factors of production
resources used to produce goods and services
entrepreneur
a person who risks time, effort, and money too start and operate a business
capitalism
an economic system in which individuals own and operate the majority of businesses that provide goods and services
invisible hand
a term created by Adam Smith to describe how an individual’s personal gain benefits others and a nation’s economy
market economy
an economic system in which businesses and individuals decide what to produce and buy, and the market determines quantities sold and prices
mixed economy
an economy that exhibits elements of both capitalism and socialism
consumer products
goods and services purchased by individuals for personal consumption
command economy
an economic system in which the government decides what goods and services will be produced, how they will be produced, for whom available goods and services will be produced, and who owns and controls the major factors of production
productivity
the average level of output per worker per hour
gross domestic product (GDP)
the total dollar value of all goods and services produced by all people within the boundaries of a country during a specified time period – usually a one-year period
inflation
a general rise in the level of prices
deflation
a general decrease in the level of prices
unemployment rate
the percentage of a nation’s labor force unemployed at any time
consumer price index (CPI)
a monthly index that measures the changes in prices of a fixed basket of goods purchased by a typical consumer in an urban area
producer price index (PPI)
an index that measures prices that producers receive for their finished goods
business cycle
the recurrence of periods of growth and recession in a nation’s economic activity
recession
two or more consecutive three-month periods of decline in a country’s GDP
depression
a severe recession that lasts longer than a typical recession and has a larger decline in business activity when compared to a recession
monetary policies
Federal Reserve’s decisions that determine the size of the supply of money in the nation and the level of interest rates
fiscal policy
government influence on the amount of savings and expenditures; accomplished by altering the tax structure and by changing the levels of government spending
federal deficit
a shortfall created when the federal government spends more in a fiscal year than it receives
national debt
the total of all federal deficits
competition
rivalry among businesses for sales to potential customers
perfect/pure competition
the market situation in which there are many buyers and sellers of a product, and no single buyer or seller is powerful enough to affect the price of that product
supply
the quantity of a product that producers are willing to purchase at each of various prices
demand
the quantity of a product that buyers are willing to purchase at each of various prices
market price
the price at which the quantity demanded is exactly equal to the quantity supplied
monopolistic competition
a market situation in which there are many buyers along with a relatively large number of sellers who differentiate their products from the products of competitors
product differentiation
the process of developing and promoting differences between one’s products and all competitive products
oligopoly
a market (or industry) in which there are few sellers
monopoly
a market (or industry) with one seller, and there are barriers to keep other firms from entering the industry
standard of living
a loose, subjective measure of how well off an individual or a society is, mainly in terms of want satisfaction through goods and services
domestic system
a method of manufacturing in which an entrepreneur distributes raw materials to various homes, where families process them into finished goods to be offered for sale by the entrepreneur
factory system
a system of manufacturing in which all the materials, machinery, and workers required to manufacture a product are assembled in one place
specialization
the separation of a manufacturing process into distinct tasks and the assignment of different tasks to different individuals
service economy
an economy in which more effort is devoted to the production of services than to the production of goods
social media
the online interaction that allows people and businesses to communicate and share ideas, personal information, and information about products or services
sustainability
the ability to maintain or improve standards of living without damaging or depleting natural resources for present and future generations
ethics
the study of right and wrong and the morality of the choices individuals make
business ethics
the application of moral standards to business situations
plagiarism
knowingly taking someone else’s words, ideas or other original material without acknowledging the source
sarbanes-oxley act of 2002
provides sweeping new legal protection for employees who report corporate misconduct
code of ethics
a guide to acceptable and ethical behavior as defined by the organization
whistle-blowing
informing the press or government officials about unethical practices within one’s organization
social responsibility
the recognition that business activities have an impact on society and the consideration of that impact in business decision making
corporate citizenship
adopting a strategic approach to fulfilling economic, ethical, environmental, and social responsibilities
caveat emptor
a Latin phrase meaning “let the buyer beware”
economic model of social responsibility
the view that society will benefit most when business is left alone to produce and market profitable products that society needs
socioeconomic model of social responsibility
the concept that business should emphasize not only profits but also the impact of its decision on society
consumerism
all activities undertaken to protect the rights of consumers
minority
a racial, religious, political, national, or other group regarded as different from the larger group of which it is a part and that is often singled out for unfavorable treatment
affirmative action program
a plan designed to increase the number of minority employees at all levels within an organization
equal employment opportunity commission (EEOC)
a government agency with the power to investigate complaints of employment discrimination and the power to sue firms that practice it
hard- core unemployed
workers with little education or vocational training and a long history of unemployment
pollution
the contamination of water, air, or land through the actions of people in an industrialized society
recycling
converting used materials into new products or components for new products in order to prevent their unnecessary disposal
green marketing
the process of creating, making, delivering, and promoting products that are environmentally safe
social audit
a comprehensive report of what an organization has done and is doing with regard to social issues that affect it
international business
all business activities that involve exchanges across national boundaries
absolute advantage
the ability to produce a specific product more efficiently than any other nation
comparative advantage
the ability to produce a specific product more efficiently than any other product
exporting
selling and shipping raw materials or products to other nations
importing
purchasing raw materials or products in other nations and bringing them into one’s own country
balance of trade
the total value of a nation’s exports minus the total value of its imports over some period of time
trade deficit
a negative balance of trade
balance of payments
the total flow of money into a country minus the total flow of money out of that country over some period of time
licensing
a contractual agreement in which one firm permits another to produce and market its product and use its brand name in return for a royalty or other compensation
letter of credit
issued by a bank on request of an importer stating that the bank will pay an amount of money to a stated beneficiary
bill of lading
document issued by a transport carrier to an exporter to prove that merchandise has been shipped
draft
issued by the exporter’s bank, ordering the importer’s bank to pay for the merchandise, thus guaranteeing payment once accepted by the importer’s bank
strategic alliance
a partnership formed to create competitive advantage on a worldwide basis
trading company
provides a link between buyers and sellers in different countries
countertrade
an international barter transaction
multinational enterprise
a firm that operates on a worldwide scale without ties to any specific nation or region
import duty (tariff)
a tax levied on a particular foreign product entering a country
dumping
exportation of large quantities of a product at a price lower than that of the same product in the home market
nontariff barrier
a nontax measure imposed by a government to favor domestic over foreign suppliers
import quota
a limit on the amount of a particular good that may be imported into a country during a given period of time
embargo
a complete halt to trading with a particular nation or in a particular product
foreign-exchange control
a restriction on the amount of a particular foreign currency that can be purchased or sold
currency devaluation
the reduction of the value of a nation’s currency that can be purchased or sold
General Agreement on Tariffs and Trade (GATT)
an international organization of nations dedicated to reducing or eliminating tariffs and other barriers to world trade
World Trade Organization (WTO)
powerful successor to GATT that incorporates trade in goods, services and ideas
economic community
an organization of nations formed to promote the free movement of resources and products among its members and to create common economic policies
export-import bank of the united states
an independent agency of the US government whose function is to assist in financing the exports of American firms
multilateral development bank (MDB)
an internationally supported bank that provides loans to developing countries to help them grow
International Monetary Fund (IMF)
an international bank that makes short-term loans to developing countries experiencing balance-of-payment deficits
sole proprietorship
a business that is owned (and usually operated) by one person
unlimited liability
a legal concept that holds a business owner personally responsible for all the debts of the business
partnership
a voluntary association of two or more persons to act as co-owners of a business for profit
general partner
a person who assumes full or shared responsibility for operating a business
limited partner
a person who invests money in a business but has no management responsibility or liability for losses beyond the amount he or she invested in the partnership
corporation
an artificial person created by law with most of the legal rights of a real person, including the rights to start and operate a business, to buy or sell property, to borrow money, to sue or be sued, and to enter into binding contracts
stock
the shares of ownership of a corporation
stockholder
a person who owns a corporation’s stock
closed corporation
a corporation whose stock is owned by relatively few people and is not sold to the general public
open corporation
a corporation whose stock can be bought and sold by any individual
domestic corporation
a corporation in the state in which it is incorporated
foreign corporation
a corporation in any state in which it does business except the one in which it is incorporated
alien corporation
a corporation chartered by a foreign government and conducting business in the united states
common stock
stock owned by individuals or firms who may vote on corporate matters but whose claims on profits and assets are subordinate to the claims of others
