Unit 1 Business Fundamentals — Study Sheet

Vocabulary study set covering business basics, financial formulas, demand drivers, the product life cycle, trends vs. fads, entrepreneurship, and industry sectors.

Need

Something necessary for survival or basic living (such as food, water, and shelter).

Want

Something you would like but don't need to survive (such as a PlayStation, expensive shoes, or a new phone).

Revenue

All the money a business earns from sales.

Expenses

Money a business spends to operate.

Profit

Money left after expenses are paid, calculated as $\text{Profit} = \text{Revenue} - \text{Expenses}$.

Break-even

The point where $\text{Revenue} = \text{Expenses}$, resulting in $\$0$ profit and $\$0$ loss.

Personal income

A factor affecting demand where having more income allows people to buy more.

Price sensitivity

How strongly customers react to changes in price.

Related goods

A factor affecting demand where the price of one product can affect demand for another (for example, if PlayStation consoles become expensive, customers may consider an Xbox).

Introduction (Product Life Cycle)

The stage where the product is new, sales are usually low, and advertising is important.

Growth (Product Life Cycle)

The stage where sales increase quickly and more customers learn about the product.

Maturity (Product Life Cycle)

The stage where sales reach a high level, growth slows, and competition is strong.

Decline (Product Life Cycle)

The stage where sales decrease as customers move to other products.

Decision point

The stage where a company decides whether to change, improve, reposition, or discontinue the product.

Trend

Something that becomes popular and can last for a relatively long period (for example, online shopping).

Fad

Something that becomes extremely popular quickly but usually disappears quickly (for example, a short-lived viral toy craze).

Entrepreneur

Someone who starts and operates a business while accepting the risks involved.

Start-up costs

Money required to start the business.

Financing

Money obtained to start or operate the business, such as loans or investments.

Business risk

The possibility that the business could lose money or fail.

Primary industry

An industry that takes natural resources from the Earth (for example, mining, fishing, forestry, and farming).

Manufacturing industry

An industry that turns raw materials into finished products (for example, a factory turning wood into furniture).

Service industry

An industry that provides a service rather than producing a physical product (for example, banks, restaurants, teachers, hairdressers, and hotels).