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Business 110
Introduction to Business
| Term | Definition |
|---|---|
| 1 Value | The relationship between the price of a good or a service and the benefits that it offers its customers |
| Business | Any organization or activity that provides goods and services in an effort to earn a profit |
| Profit | The money that a business earns in sals (revenue), minus expenses, such as the cost of goods, and the cost of salaries. [Revenue - Expenses = Profit/loss] |
| Loss | When a business incurs expenses that are greater than its revenue |
| Entrepreneurs | People who risk their time, money, and other resources to start and manage business |
| Standard of Living | The quality and quantity of goods and services available to a population |
| Quality of Life | The overall sense of well-being experienced by either an individual or a group |
| Nonprofits | Business-like establishments that employ people and produce goods and services with the fundamental goal of contributing to the community rather than generating financial gain |
| Factors of Production | Four fundamental elements -- natural resources, capital, human resources, and entrepreneurship -- that businesses need to achieve their onjectives |
| Business environment | The setting in which business operates. The five key components are: economic environment, competitive environment, technological environment, social environment, and global environment |
| Speed-To-Market | The rate at which a new product moves from conception to commercialization |
| Business Technology | Any tools -- especially computer, telecommunication, and other digital products -- that businesses can use to become more efficient and effective |
| World Wide Web | The service that allows computer users to easily access and share information on the internet in the form of text, graphics, video, apps, and animation |
| E-commerce | Business transactions conducted online, typically via the internet |
| Demographics | The measurable characteristics of a population. Demographic factors include population size and density, as well as specific traits such as age, gender, and race |
| Free Trade | An international economic and political movement designed to help goods and services flow more freely across international boundaries |
| General Agreement on Tariffs and Trade (GATT) | An international trade agreement that has taken bold steps to lower tariffs and promote free trade worldwide |
| 2 Economy | A financial and social system of how resources flow through society, from production, to distribution, to consumption |
| Economics | The study of the choices that people, companies, and governments make in allocating society's resources |
| Macroeconomics | The study of a country's overall economic dynamics, such as the employment rate, the gross domestic product, and taxation policies |
| Microeconomics | The study of smaller economic units such as individual consumers, families, and individual businesses |
| Fiscal Policy | Government efforts to influence the economy through taxation and spending |
| Budget Surplus | Overage that occurs when revenue is higher than expenses over a given period of time |
| Budget Deficit | Short fall that occurs when expenses are higher than revenue over a given period of time |
| Federal Debt | The sum of all the money that the federal government has borrowed over the years and not yet paid |
| Monetary Policy | Federal Reserve decision that shape the economy by influencing interest rates and the supply of money |
| Commercial Banks | Privately owned financial institutions that accept demand deposits and make loans and provide other services for the public |
| Money Supply | The total amount of money within the overall economy |
| Money | Anything generally accepted as a medium of exchange, a measure of value, or a means of payment |
| M1 Money Supply | Includes all currency plus checking accounts and traveler's checks |
| M2 Money Supply | Includes all of M1 money supply plus most savings accounts, money market accounts, and certificates of deposits |
| Open Market Operations | The Federal Reserve function of buying and selling government securities, which include treasury bonds, notes, and bills |
| Discount Rate | The rate of interest that the Federal Reserve charges when it loans funds to banks |
| Federal Deposit Insurance Corporation (FDIC) | A federal agency that insures deposits in banks that thrift institution for up to $250,000 per customer, per bank |
| Reserve Requirement | A rule set by the Fed, which specifies the minimum amount of reserves (or funds) a bank must hold, expressed as a percentage of the bank's deposits |
| Economic System | A structure for allocating limited resources |
| Capitalism | An economic system -- Also known as the private enterprise or free market system -- based on private ownership, economic freedom, and fair competition |
| Pure Competition | A market structure with many competitors selling virtually identical products, Barriers to entry are quite low |
| Monopolistic Compettition | A market structure with many competitors selling differentiated products Barriers to entry are low |
| Oligopoly | A market structure with only a handful of competitors selling products that can be similar or different Barriers to entry are typically high |
| Monopoly | A market structure with one producer completely dominating the industry, leaving no room for any significant competitors Barriers to entry tend to be virtually insurmountable |
| Natural Monopoly | A market structure with one company as the supplier of a product because the nature of that product make a single supplier more efficient than multiple, competing ones Most natural monopolies are government sanctioned and regulated |
| Supply | The quality of products that producers are willing to offer for sale at different market prices |
| Supply Curve | The graphed relationship between price and quantity from a supplier standpoint |
| Demand | The quantity of products that consumers are willing to buy at different market prices |
| Demand Curve | The graphed relationship between price and quantity from a customer demand standpoint |
| Equilibrium Price | The price associated with the point at which the quantity demanded of a product equals the quantity supplied |
| Socialism | An economic system based on the principle that the government should own and operate key enterprises that directly affect public welfare |
| Communism | An economic and political system that calls for public ownership of virtually all enterprises, under the direction of a strong central government |
| Mixed Economies | Economies that embody elements of both planned and market-based economic systems |
| Privatization | The process of converting government-owned businesses to private ownership |
| Gross Domestic Product (GDP) | The total value of all final goods and services produced within a nation's physical boundaries over a given period of time |
| Unemployed Rate | The percentage of people in the labor force over age 16 who do not have jobs and are actively seeking employment |
| Business Cycle | The periodic contraction and expansion that occur over time in virtually every economy |
| Contraction | A period of economic downturn, marked by rising unemployment and falling business production |
| Recession | An economic downturn marked by a decrease in the GDP for two consecutive quarters |
| Depression | An especially deep and long-lasting recession |
| Recovery | A period of rising economic growth and employment |
| Expansion | A period of robust economic growth and high employment |
| Inflation | A period of rising average prices across the economy |
| Hyperinflation | An average monthly inflation rate of more than 50% |
| Disinflation | A period of slowing average price increases across the economy |
| Deflation | A period of falling average prices across the economy |
| Consumer Price Index (CPI) | A measure of inflation that evaluates the change in the weighted-average price of goods and services that the average consumer buys each month |
| Producer Price Index (PPI) | A measure of inflation that evaluates the change over time in the weighted-average wholesale prices |
| Productivity | The basic relationship between the production of goods and services (output) and the resources needed to produce them (input) calculation via the following equation: output/input = productivity |
| 3 Opportunity Cost | The opportunity of giving up the second-best choice when making a decision |
| Absolute Advantage | The benefit a country has in a given industry when it can produce more of a product than other nations using the same amount of resources |
| Comparative Advantage | The benefit a country has in a given industry if it can make products at a lower opportunity cost than other countries |
| Balance of Trade | A basic measure of the difference in value between a nation's exports and imports, including both goods and services |
| Trade Surplus | Overage that occurs when the total value of a nation's exports is higher than the total value of its imports |
| Trade Deficit | Shortfall that occurs when the total value of a nation's imports is higher than the total value of its imports |
| Balance of Payments | A measure of the total flow of money into or out of a country |
| Balance of Payments Surplus | Overage that occurs when more money flows into a nation than out of that nation |
| Balance of Payments Deficit | Shortfall that occurs when more money flows out of a nation than into that nation |
| Exchange Rate | A measurement of the value of one nation's currency relative to the currency of other nations |
| Countertrade | International trade that involves the barter of products for products rather than for currency |
| Foreign Outstanding (Also Contract Manufacturing) | Contracting with foreign suppliers to produce products, usually at a fraction of the cost of domestic production |
| Importing | Buying products domestically that have been produced or grown in foreign nations |
| Exporting | Selling products in foreign nations that have been produced or grown domestically |
| Foreign Licensing | Authority granted by a domestic firm to a foreign firm for the rights to produce and market its product or to use its trademark/patent rights in a defined geographical area |
| Foreign Franchising | A specialized type of foreign licensing in which a firm expands by offering businesses in other countries the right to produce and market its products according to specific operating requirements |
| Direct Investment (or Foreign Direct Investment) | When firms either acquire foreign firms or develop new facilities from the ground up in foreign countries |
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amethystMT9611
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