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Chapter 1 Flashcards

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1
Q

business

A

organization that provides goods or services to earn profits

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2
Q

profit

A

difference between an business’s revenues and its expenses

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3
Q

external environment

A

everything outside and organization’s boundaries that might affect it

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4
Q

domestic business environment

A

environment in which a firm conducts its operations and derives its revenues

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5
Q

global business environment

A

international forces that affect a business

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6
Q

technological environment

A

all the ways by which firms create value for their constituents

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7
Q

political-legal environment

A

relationship between business and government

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8
Q

sociocultural environment

A

customs, mores, values, and demographic characteristics of the society in which an organization functions

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9
Q

economic environment

A

relevant conditions that exist in the economic system in which a company operates

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10
Q

economic system

A

nation’s system for allocating its resources among its citizens

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11
Q

factors of production

A

resources used in the production of goods and services - labor, capital, entrepreneurs, physical resources, and information resources

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12
Q

labor (human resources)

A

physical and mental capabilities of people as they contribute to economic production

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13
Q

capital

A

funds needed to create and operate a business enterprise

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14
Q

entrepreneur

A

individual who accepts the risks and opportunities involved in creating and operating a new business venture

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15
Q

physical resources

A

tangible items that organizations use in the conduct of their businesses

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16
Q

information resources

A

data and other information that businesses use

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17
Q

planned economy

A

economy that relies on a centralized government to control all or most factors of production and to make all or most production and allocation decisions

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18
Q

communism

A

political system in which the government owns and operates all factors of production

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19
Q

market economy

A

economy in which individuals control production and allocation decisions through supply and demand

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20
Q

market

A

mechanism for exchange between buyers and sellers of a particular good or service

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21
Q

capitalism

A

system that sanctions the private ownership of the factors of production and encourages entrepreneurship by offering profits as an incentive

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22
Q

mixed market economy

A

economic system featuring characteristics of both planned and market economies

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23
Q

privatization

A

process of converting government enterprises into privately owned companies

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24
Q

socialism

A

planned economic system in which the government owns and operates only selected major sources of production

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25
demand
willingness and ability of buyers to purchase a good or service
26
supply
willingness and ability of producers to offer a good or service for sale
27
law of demand
principle that buyers will purchase (demand) more of a product as its prices drops and less as its price increases
28
law of supply
principle that producers will offer (supply) more of a product for sale as its price rises and less as its price drops
29
demand and supply
schedule assessment of the relationships among different levels of demand and supply at different price levels
30
demand curve
graph showing how many units of a product will be demanded (bought) at different prices
31
supply curve
graph showing how many units of a product will be supplied (offered for sale) at different prices
32
market price (equilibrium)
profit-maximizing price at which the quantity of goods demanded and the quantity of goods supplied are equal
33
surplus
situation in which quantity supplied exceeds quantity demanded
34
shortage
situation in which quantity demanded exceeds quantity supplied
35
private enterprise
economic system that allows individuals to pursue their own interests without undue governmental restriction
36
competition
vying among businesses for the same resources or customers
37
perfect competition
market or industry characterized by numerous small firms producing an identical product
38
monopolistic competition
market or industry characterized by numerous sellers trying to differentiate their products from those of competitors
39
oligopoly
market or industry characterized by a handful of (generally large) sellers with the power to influence the prices of their products
40
monopoly
market or industry in which there is only one producer that can therefore set the prices of its products
41
natural monopoly
industry in which one company can most efficiently supply all needed goods or services
42
economic indicator
statistic that helps assess the performance of an economy
43
business cycle
short-term pattern of economic expansions and contractions
44
aggregate output
total quantity of goods and services produced by an economic system during a given period
45
standards of living
total quantity and quality of goods and services people can purchase with the currency used in their economic system
46
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
47
gross national product (GNP)
total value of all goods and services produced by a national economy within a given period regardless of where the factors of production are located
48
real GDP
GDP adjusted to account for changes in currency values and price changes
49
nominal GDP
GDP measured in current dollars or with all components valued at current prices
50
purchasing power parity
principle that exchange rates are set so that the prices of similar products in different countries are about the same price
51
productivity
measure of economic growth that compares how much a system produces with the resources needed to produce it
52
balance of trade
economic value of all the products that a country exports minus the economic value of all the products it imports
53
national debt
amount of money the government owes its creditors
54
stability
condition in which the amount of money available in an economic system and the quantity of goods and services produced in it are rowing at about the same rate
55
inflation
situation that occurs when widespread price increases occur throughout an economic system
56
consumer price index (CPI)
measure of the prices of typical products purchased by consumers living in urban areas
57
unemployment
level of joblessness among people actively seeking work in an economic system
58
recession
period during which aggregate output, as measured by GDP, declines
59
depression
prolonged and deep recession
60
fiscal policies
policies that a government uses to direct how it collects and spends revenue
61
monetary policies
policies that a government uses to control the size of its money supply
62
stabilization policy
government economic policy intended to smooth out fluctuations in output and unemployment and to stabilize prices

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