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Business Essentials Ch. 1 Vocabulary
Chapter 1 Vocabulary for Business Essentials, 6th Edition, by Ebert and Griffin
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Business
Undergraduate 1
01/21/2014

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Term
business
Definition
An organization the provides goods or services to earn profits (5)
Term
profits
Definition
The difference between a business's revenues and its expenses (5)
Term
external environment
Definition
Everything outside an organization's boundaries that might affect it (6)
Term
domestic business environment
Definition
The environment in which a firm conducts its operations and derives its revenues (7)
Term
global business environment
Definition
The international forces that affect a business (7)
Term
technological environment
Definition
All the ways by which firms create value for their constituents (7)
Term
political-legal environment
Definition
The relationship between business and government (7)
Term
sociocultural environment
Definition
The customs, mores, values and demographic characteristics of the society in which an organization functions (8)
Term
economic system
Definition
A nation's system for allocating its resources among its citizens (8)
Term
factors of production
Definition
Resources used in the production of goods and services - labor, capital, entrepreneurs, physical resources and information resources (8)
Term
labor (human resources)
Definition
Physical and mental capabilities of people as they contribute to economic production (8)
Term
capital
Definition
Funds needed to create and operate a business enterprise (8)
Term
entrepreneur
Definition
Individual who accepts the risks and opportunities involved in creating and operating a new business venture (9)
Term
physical resources
Definition
Tangible items organizations use in the conduct of their businesses (10)
Term
information resources
Definition
Data and other information used by businesses (10)
Term
planned economy
Definition
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. (11)
Term
planned economy
Definition
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. (11)
Term
market economy
Definition
Economy in which individuals control production and allocation decisions through supply and demand (11)
Term
communism
Definition
Political system in which the government owns and operates all factors of production (11)
Term
market
Definition
Mechanism for exchange between buyers and sellers of a particular good or service (11)
Term
capitalism
Definition
System that sanctions the private ownership of the factors of production and encourages entrepreneurship by offering profits as an incentive (12)
Term
mixed market economy
Definition
Economic system featuring characteristics of both planned and market economies (12)
Term
privatization
Definition
Process of converting government enterprises into privately own companies (12)
Term
socialism
Definition
Planned economic system in which the government owns and operates only selected major sources of production (12)
Term
demand
Definition
willingness and ability of buyers to purchase a good or service (13)
Term
supply
Definition
The willingness and ability of producers to offer a good or service for sale (14)
Term
law of demand
Definition
Principle that buyers will purchase (demand) more of a product as its price drops and less as its price increases (14)
Term
law of supply
Definition
Principle that producers will offer (supply) more of a product for sale as its price rises and less as its price drops (14)
Term
demand curve
Definition
Graph showing how many units of a product will be demanded (bought) at different prices (14)
Term
supply curve
Definition
Graph showing how many units of a product will be supplied (offered for sale) at different prices (14)
Term
surplus
Definition
situation in which quantity supplied exceeds quantity demanded (14)
Term
shortage
Definition
Situation in which quantity demanded exceeds quantity supplied (14)
Term
private enterprise
Definition
Economic system that allows individuals to pursue their own interests without undue government restriction (15)
Term
competition
Definition
Vying among businesses for the same resources or customers (16)
Term
perfect competition
Definition
Market or industry characterized by numerous small firms producing an identical product (16)
Term
monopolistic competition
Definition
Market or industry characterized by numerous buyers and relatively numerous sellers trying to differentiate their products from those of competitors (17)
Term
oligopoly
Definition
Market or industry characterized by a handful of (generally large) sellers with the power to influence the price of their products (17)
Term
monopoly
Definition
Market or industry in which there is only one producer that can therefore set the prices of its products (17)
Term
economic indicator
Definition
A statistic that helps assess the performance of an economy (18)
Term
business cycle
Definition
Short-term pattern of economic expansions and contractions (19)
Term
aggregate output
Definition
The total quantity of goods and services produced by an economic system during a given period (19)
Term
standard of living
Definition
The total quantity and quality of goods and services people can purchase with the currency used in their economic system (19)
Term
gross domestic product (GDP)
Definition
Total value of all goods and service produced within a given period by a national economy through domestic factors of production (20)
Term
gross national product (GNP)
Definition
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 (20)
Term
real GDP
Definition
Gross domestic product adjusted to account for changes in currency values and price changes (20)
Term
real GDP
Definition
Gross domestic product adjusted to account for changes in currency values and price changes (20)
Term
nominal GDP
Definition
Gross domestic product measured in current dollars or with a components valued at current prices (20)
Term
purchasing power parity
Definition
The principle that exchange rates are set so that the prices of similar products in different countries are about the same (20)
Term
productivity
Definition
A measure of economic growth that compares how much a system produces with the resources needed the produce it (21)
Term
balance of trade
Definition
The economic value of all the products that a country exports minus the value of all the products it imports (22)
Term
national debt
Definition
The amount of money the government owes its creditors (23)
Term
stability
Definition
Condition in which the amount of money available in an economic system and the quantity of goods and services produced in it are growing at about the same rate (24)
Term
inflation
Definition
Occurs when widespread price increases occur throughout an economic system (24)
Term
consumer price index (CPI)
Definition
A measure of the prices of typical products purchased by consumers living in urban areas (24)
Term
unemployment
Definition
The level of joblessness among people actively seeking work in an economic system (25)
Term
recession
Definition
A period during which aggregate output, as measured by GDP, declines (26)
Term
depression
Definition
A prolonged and deep recession (26)
Term
fiscal policies
Definition
Policies used by a government regarding how it collects and spends revenue (26)
Term
monetary policies
Definition
Policies used by a government to control the size of its money supply (26)
Term
stabilization policy
Definition
Government economic policy intended to smooth out fluctuations in output and unemployment and to stabilize prices (27)
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