understanding the contemporary business environment - terms

Business essentials -- part 1 -- terms

business -- an organization that provides goods or services to earn profits
profits -- the difference between a businesses revenues and its expenses
economic system -- a nation's system for allocating its resources are among its citizens
factors of production -- resources used in the production of goods and services -- labor, capital, entrepreneurs, physical resources, and information resources
labor (or human resources) -- the physical and mental capabilities of people as they contribute to economic production
capital -- the funds needed to create and operate a business enterprise
entrepreneur -- an individual who accepts the risks and opportunities involved in creating an operating a new business venture
physical resources -- tangible things organizations use in the conduct of their business
information resources -- data and other information used by businesses
planned economy -- economy that relies on a centralized government to control all or most factors of production and to make all or most production allocation decisions
market economy -- economy which individuals control production allocation decisions through supply and demand
market -- mechanism for exchange between buyers and sellers or particular good or service
input market -- Mark in which firms by resources from supplier households
output market -- Mark in which firms supply goods and services in response to demand on the part of households
capitalism -- market economy that provides for private ownership of production and encourages entrepreneurship by offering profits as an incentive
mixed market economy -- economic system featuring characteristics of both demand and market economies
privatization -- process of converting government enterprises into privately owned companies
socialism -- planned and economic system in which the government owns and operates only selected major sources of production
demand -- the willingness inability of buyers to purchase a better service
supply -- the willingness inability of producers to offer a good or service for sale
law of demand --principle that buyers will purchase more of a product as its price drops in less as its price increases
law of supply --principle that producers will offer more or product for sale as its price rises and less as its price drops
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 at different prices
supply curve -- graph showing how many units of a product will be supplied at different prices
market price (or equilibrium price) -- profit maximizing price at which the quantity of goods demanded in the quantity of goods supplied are equal
surplus -- situation in which quantities supplied exceeds quantity demanded
shortage -- situation in which quantity demanded exceeds quantity supplied
private enterprise -- economic system that allows individuals to pursue their earned interest without undue governmental restrictions
competition -- vying among businesses for the same resources or customers
perfect competition -- market or industry characterized by numerous small firms producing an identical product
monopolistic competition -- market or industry characterized by numerous buyers and relatively numerous sellers trying to differentiate their products from those of competitors
oligopoly -- market or industry characterized by a handful of (generally large) sellers with the power to influence the prices of their products
monopoly -- market or industry in which there is only one producer, which can therefore set the prices of its products
natural monopoly -- industry in which one company can most efficiently supply all needed goods or services
business cycle -- pattern of short-term ups and downs (expansions and contractions) in an economy
aggregate output -- total quantity of goods and services produced by an economic system during a given period
standard of living -- total quantity and quality of goods and services that a countries citizens can purchase with the currently used in their economic system
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
nominal GDP -- GDP measured in current dollars or with all components valued at current prices
real GDP -- GDP calculated to account for changes in currency values and price changes
productivity -- measure of economic growth that compares how much a system produces with the resources needed to produce it
national debt -- amount of money that a government owes its creditors
stability -- condition in an economic system in which the amount of money available in the quantity of goods and services produced are growing at or about the same rate
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
unemployment -- level of joblessness among people actively seeking work in an economic system
recession -- period during which aggregate output, as measured by real GDP, declines
depression -- particularly severe and long-lasting recession
fiscal policies -- economic policies that determine how the government collects and spends its revenue
monetary policies -- government economic policies that determine the size of the nation's monetary supply
stabilization policy -- government policy, embracing both fiscal and monetary policies, whose goal is to smooth out fluctuations and output and unemployment and to stabilize prices