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Intro to Bus Ch. 1

Introduction to Business Ch. 1 Vocabulary

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 a society's needs.
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 the policies and decisions made by an organization
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 to 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 a product purchased to satisfy personal and family needs
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
prductivity the average level of output per worker per hour
gross domestic product the total dollar value of all goods and services produced by all people within the boundaries of a country during 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 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 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 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 a commercial bank chartered by the U.S. Comptroller of the Currency
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 a quantity of product that producers are willing to sell 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 (industry) in which there are few sellers
monopoly a market (or industry) with only one seller, and there are barriers to keep other firms from entering the industry
natural monopoly an industry requiring huge investments in capital and within which any duplication of facilities would be wasteful and thus not int he public interest
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 sevices
barter an exchange in which goods or services are traded directly for other goods or services without using money
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 merchant 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 the different tasks to different individuals
e-business the organized effort of individuals to produce and sell through the Internet, for a profit, the products and services that satisfy society's needs
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 interactions that allow people and businesses to communicate and share ideas, personal information, and information about products and services
sustainability meeting the needs of the present without compromising the ability of future generations to meet their own needs
Created by: kristithompson