BADM 101 Unit 1 Vocab

the relationship between price of a good or a service and the benefits it offers its customers

value

any organization or activity that provides goods and services in an effort to earn a profit

business

the money that a business earns in sales, minus expenses

profit

when a business incurs expenses greater than revenue

loss

people who risk their time, money, and other resources to start and manage a business

entreprenuers

the quality and quantity of goods and services available to a population

standard of living

the overall sense of well-being experiences by either an individual or a group

quality of life

mid 1700s to mid 1800s; production efficiency and loss of individual ownership and personal pride

Industrial Revolution

second half of 1800s; built business empires, government eventually stepped in because it was so terrible

entrepreneurship era

early 1900s; better efficiency = assembly lines

production era

post WWII; brand development

marketing era

modern day; happy customers

relationship era

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

non-profits

four fundamental elements - natural resources, capital, human resources, and entrepreneurship - that businesses need to achieve their objectives

factors of production

offer value when produced in natural state

natural resources

machines, tools, buildings, info, and tech

capital

physical, intellectual, and creative contributions of people in economy

human resources

key ingredient to economic freedom

entrepreneurship

the setting in which a business operates; 5 key = economic, competitive, tech, social, and global environments

business environment

the rate at which a new product moves from conception to commercialization

speed-to-market

any tools - especially computers, telecommunications, and other digital products - that businesses can use to becomes more efficient and effective

business technology

the world’s largest computer network; essentially a network of computer networks all operating under a common set of rules that allow them to communicate with each other

internet

the marketing, buying, selling, and servicing of products over a network (mostly internet)

e-commerce

the measurable characteristics of a population, demographic factors include population size and density as well as age, gender, race, etc.

demographics

the unrestricted movement of goods and services across international borders

free trade

an international trade treaty designed to encourage worldwide trade among its members

General Agreement on Tariffs and Trade

legislation, government, corruption

economic environment

customer satisfaction, speed-to-market

competitive environment

efficiency and effectiveness, internet, ecommerce

technological environment

values, attitudes, customs and beliefs; demographics, diversity, aging, worker expectations, ethics

social environment

free trade

global environment

a financial and social system of how resources flow through society, from production to distribution to consumption

economy

the study of the choices people, companies, and governments make in allocating society’s resources

economy

the study of a country’s overall economic dynamics, such as the employment rate, the gross domestic product, and taxation policies

macroeconomics

the study of smaller economic units such as individual consumers, families, and individual businesses

microeconomics

government efforts to influence the economy through taxation and spending

fiscal policy

a package of draconian spending outs and sharp tax hikes

fiscal cliff

average that occurs when revenue is higher than expenses over a given period of time

budget surplus

shortfall that occurs when expenses are higher than revenue over a given period of time

budget deficit

the sum of all money that the federal government has borrowed over the years and not yet repaid

federal debt

Federal Reserve decisions that shape the economy by influencing interest rates and the supply of money

monetary policy

privately owned financial institutions that accept demand deposits and make loans and provide other services for the public

commercial banks

the total amount of money within the overall economy

money supply

anything generally accepted as a medium of exchange, a measure of value, or a means of payment

money

includes all currency plus checking accounts and traveler’s checks

M1

includes all of M1 money supply plus most savings account, money market accounts, and certificates of deposit

M2

the Federal Reserve function of buying and selling government securities, which include treasury bonds, notes, and bills

open market operations

the rare of interest that the Federal Reserve charges when it loans funds to banks

discount rate

a federal agency that insures deposits in banks and thrift institutions up to $250,000 per customer per bank

FDIC

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

reserve requirement

a structure for allocating limited resources

economic system

an economic system - aka the private enterprise or free market system - based on private ownership, economic freedom, and fair competition

capitalism

a market structure with many competitors selling virtually identical products; barriers to entry are quite low

pure competition

a market structure with many competitors selling differentiated products; barriers to entry are quite low

monopolistic competition

a market structure with only a handful of competitors selling products that can be similar or different; barriers to entry are typically high

oligopoly

a market structure with one producer completely dominating the industry leaving no room for insignificant competitors; barriers to entry tend to be virtually insurmountable

monopoly

a market structure with one company as the supplier of that product because the nature of that product makes a single supplier more efficient than multiple competing ones; most natural monopolies are government sanctioned and regulated

natural monpoly

the quantity of products that producers are willing to offer for sale at different market prices

supply

the graphed relationship between price and quantity from a supplier standpoint

supply curve

the quantity of products that consumers are willing to buy at different market prices

demand

the graphed relationship between price and quantity from a customer demand standpoint

demand curve

the price associated with the point at which the quantity from a customer demanded of a product = the quality supplied

equilibrium price

an economic system based on the principle that the government should own and operate key enterprises that directly affect public welfare

socialism

an economic and political system that calls for public ownership of virtually all enterprises, under the direction of a strong central government

communism

economies that embody elements of both planned and market-based economic systems

mixed economies

the process of converting government owned businesses to private ownership

privitization

the total value of all goods and services produced within a nation’s physical boundaries over a given period of time

gross domestic product (GDP)

the percentage of people in the labor force over age 16 who do not have jobs and are actively seeking employment

unemployment rate

quitting to be happier; short term

frictional unemployment

long term; economy doesn’t need their skills

structural unemployment

laid-off during recessions

cyclical unemployment

related to the time of the year

seasonal unemployment

the periodic contraction and expansion that occur over time in virtually every economy

business cycle

a period of economic downturn, marked by rising unemployment and falling business production

contraction

an economic downturn marked by a decrease in the GDP for two consecutive quarters

recession

an especially deep and long-lasting recession

depression

a period of rising economic growth and employment

recovery

a period of robust economic growth and high employment

expansion

a period of rising average prices across the economy

inflation

an average monthly inflation rate of more than 50%

hyper inflation

a period of slowing average price increase across the economy

disinflation

a period of falling average prices across the economy

deflation

a measure of inflation that evaluates the change in the weight-average price of goods and services that the average consumer buys each month

consumer price index (CPI)

a measure of inflation that evaluates the change over time in the prices that businesses pay each other for goods and services on a weighted average

producer price index (PPI)

the basic relationship between the production of goods and services (output) and the resources needed to produce them (input) calculated via output/input 5 productivity

productivity

international trade offers a valuable opportunity for individual firms to capitalize on factors of production that simply aren’t present in the right amount for the right price in each individual country

access to factors of production

global trade reduces dependence on one economy, lowering the economic risk for multinational firms

reduced risk

international trade can also offer companies an invaluable source of new ideas

inflow of innovation

the opportunity of giving up the second-best choice when making a decision

opportunity cost

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

absolute advantage

the benefit a country has in a given industry if it can make products at a lower opportunity cost than other countries

comparative advantage

a basic measure of the difference in value between a nation’s exports and imports, including both goods and services

balance of trade

overage that occurs when the total value of a nation’s exports is higher than the total value of its imports

trade surplus

shortfall that occurs when the total value of a nation’s exports is higher than the total value of its exports

trade deficit

a measure of the total flow of money into or out of a country

balance of payments

overage that occurs when more money flows into a nation than out of that nation

balance of payments surplus

shortfall that occurs when more money flows out of a nation than out of a nation

balance of payments deficit

a measurement of the value of one nation’s currency relative to the currency of other nations

exchange rates

international trade the involves the barter of products for products rather than currency

countertrade

contracting with foreign supplies to produce products, usually at a fraction of the cost of domestic production

foreign outsourcing (contract manufactoring)