Midterm #1 Flashcards
Business
An organization that seeks to earn profits by providing goods and services.
Profit
What remains (if anything) after a business expenses are subtracted from its sales revenues.
Not-for-profit Organization
An organization that provides goods and services to customers, but does not seek to make a profit while doing so.
Economic System
The way in which a nation allocates its resources among its citizens.
Factors of Production
The resources used o produce goods and services: labour, capital, entrepreneurs, and natural resources.
Command Economy
An economic system in which government controls all or most factors of production and makes all or most production decisions.
Market Economy
An economic system in which individuals control all or most factors of production and make all or most production decisions.
Communism
A type of command economy in which the government owns and operates all industries.
Market
An exchange process between buyers and sellers of a particular good or service.
Input Market
Firms buy resources that they need in the procedure of goods and services.
Output Market
Firms supple goods and services in response to demand on the part of consumers.
Capitalism
An economic system in which markets decide what, when, and for whom to produce.
Mixed Market Economy
An economic system with elements of both a command economy and a market economy; in practice, typical of most nations’ economies.
Privatization
The transfer of activities from the government to the private sector.
Deregulation
A reduction in the number of laws affecting business activity.
Competition Act
Prohibits a variety of business practices that lessen competition.
Lobbyist
A person hired by a company or an industry to represent its interests with government officials.
Trade Association
An organization dedicated to promoting the interests and assisting the members of a particular industry.
Demand
The willingness and ability of buyers to purchase a product or service.
Supply
The willingness and ability of producers to offer a good or service for sale.
Law of Demand
The principle that buyers will purchase (demand) more of a product as price rises.
Law of Supply
The principle that producers will offer (supply) more of a product as price rises.
Demand and Supply Schedule
Assessment of the relationships between different levels of demand and supply at different price levels.
Demand Curve
Graph showing how many units of a product will be demanded (bought) at different prices.
Supply Curve
Graph showing how many units of a product will be supplied (offered for sale) at different prices.
Market Price (Equilibrium price)
Profit-maximizing price at which the quantity of goods demanded and the quantity of goods supplied are equal.
Private Enterprise
An economic system characterized by private property rights, freedom of choice, profits, and competition.
Perfect Competition
A market or industry characterized by a very large number of small firms producing an identical product so that none of the firms has any ability to influence price.
Surplus
Situation in which quantity supplied exceeds quantity demanded.
Monopoly
A market or industry with only one producer, who can set the price of its product and/or resources.
External Environment
Everything outside an organization’s boundaries that might affect it.
Economic Environment
Conditions of the economic system in which an organization operates.
Aggregate Output
Total quantity of goods and services produced by an economic system during a given period.
Business Cycle
Pattern of short-term ups and downs (expansions and contractions) in an economy.
Gross Domestic Product (GDP)
Total value of all goods and services produced within a given period by a national economy through domestic factors of production.
Gross National Product (GNP)
Total value of all goods and services produced by a national economy within a given a period regardless of where the factors of production are located.
GDP Per Capita
Gross domestic product per person.
Real GDP
GDP calculated to account for changes in currency values and price changes.
Purchasing Power Parity
Principle that exchange rates are set so that the prices of similar products in different countries are about the same.
Productivity
Measure of economic growth that compares how much a system produces with the resources needed to produce it.
Balance of Trade
The total of a country’s exports (sales to other countries) minus its imports (purchases from other countries).
National Debt
The total amount of money that a country owes its creditors.
Budget Deficits
The result of the government spending more in one year than it takes in during that year.
Inflation
Occurrence of widespread price increases throughout an economic system.
Consumer Price Index (CPI)
Measure of the prices of typical products purchased by consumers living in urban areas.
Deflation
A period of generally falling prices.
Unemployment
The level of joblessness among people actively seeking work in an economic system.
Fiscal Policies
Policies whereby governments collect and spend revenues.
Monetary Polocies
Policies whereby the government controls the size of the nation’s money supply.
Research and Development (R&D)
Those activities that are necessary to provide new products, services, and processes.
Political-Legal Environment
Conditions reflecting the relationship between business and government, usually in the form of government regulation.
Socio-cultural Environment
Conditions including the customs, values, attitudes, and demographic characteristics of the society in which an organization functions.
Outsourcing
Strategy of paying suppliers and distributors to perform certain business processes or to provide needed materials or services.
Business Process Management
Approach by which firms move away from department-oriented organization and toward process-oriented team structures that cut across old departmental boundaries.
Acquisition
The purchase of a company by another, larger firm, which absorbs the smaller company into its operations.
Merger
The union of two companies to form a single new business.
Poison Pill
A defence management adopts to make a firm less attractive to an actual or potential hostile suitor in a takeover attempt.
Divestiture
Occurs when a company sells part of its existing business operations to another company.
Spinoff
Strategy of setting up one or more corporate units as new, independent corporations.
Strategic Alliance
An enterprise in which two or more persons or companies temporarily join forces to undertake a particular project.
Ethics
Individual standards or moral values regarding what is right and wrong or good and bad.
Business Ethics
Ethical or unethical behaviours by a manager or employee of an organization.
Managerial Ethics
Standards oh behaviour that guide individual managers in their work.
Conflict of Interest
Occurs when an activity benefits the employee at the expense of the employer.
Corporate Social Responsibility
The idea that a business should balance its a commitments to individuals and groups that are directly affected by the organization’s activities.
Fair-trade Movement
A movement designed to help workers in developing countries receive fair payments for their work.
Organizational Stakeholders
Groups, individuals, and organizations that are directly affected by the practices of an organization and that therefore have a stake in its performance.
Consumerism
A social movement that seeks to protect and expand the rights of consumers in their dealings with businesses.
Whistle-Blower
An individual who calls attention to an unethical, illegal, and/or socially irresponsible practice on the part of a business or other organization.
Insider Trading
The use of confidential information to gain from the purchase or sale of stock.
Pollution
The introduction of harmful substances into the environment.
Recycling
The reconversion of waste materials into useful products.
Sustainable Development
Activities that meet current needs, but will not put future generations at a disadvantage when they try to meet their needs.
Social Audit
A systematic analysis of how a firm is using funds earmarked for social-responsibility goals and how effective these expenditures have been.
Law
The set of rules and standards that a society agrees upon to govern the behaviour of its citizens.