Foundations of Business and Economics

These flashcards cover essential vocabulary and concepts related to the foundations of business and economics.

Business

The exchange of goods, services, or money for mutual benefit or profit.

Barter

The exchange of goods without using money.

Standard of Living

A measure of how well a person or family is doing in terms of satisfying needs and wants with goods and services.

Free Enterprise

A system in which private businesses are able to start and do business competitively to earn profits, with a minimal degree of government regulation.

Gross National Product (GNP)

The market value of all final goods and services produced over a one-year period.

Business Enterprise

An organization involved in exchanging goods, services, or money to earn a profit.

Consumer

A person who purchases a good or service for personal use.

Business Profit

The difference between business income (revenue) and business expenses (costs); selling price minus all costs of making and selling a product.

Opportunity Cost

The cost of choosing to use resources for one purpose while sacrificing the next best alternative for the use of those resources.

Economic Profit

What remains after expenses and opportunity costs are subtracted from income.

Economics

The study of how a society chooses to use scarce resources to produce goods and services and to distribute them for consumption.

Natural Resources

Resources provided in limited amounts by nature, such as oil, coal, water, and timber.

Capital Resources

Goods produced for the purpose of making other types of goods and services.

Labor Resources

The human talent, skills, and competence available in a nation.

Allocation

The process of choosing how resources will be used to meet a society's needs and wants; includes the distribution of products to consumers.

Economic System

The accepted process by which labor, capital, and natural resources are organized to produce and distribute goods and services in a society.

Planned Economy

An economy in which the government owns the productive resources, financial enterprises, retail stores, and banks.

Joint Venture

The formal cooperation of two or more businesses to share business decision making, investment risks, and profits.

Mixed Economy

An economy in which both private and government production of goods and services occurs.

Capitalism

Type of economic system characterized by private ownership of capital and by competition among businesses seeking a profit.

Mercantilism

A system of state power, with public authority controlling and directing the nation's economic life.

Laissez-Faire

A policy that encourages government to leave business and the economy alone.

Profit Motive

Expected or actual returns that motivate business leaders to do what must be done.

Industrial Revolution

The development of modern technology and production processes, which began in England about 1769.

Depression

A period of drastic decline in the national economy, characterized by decreasing business transactions, falling prices, and high unemployment.

Recession

A cycle or period when the level of economic activity declines for at least a six-month period.

Inflation

The rise in the average level of prices for all goods and services in a particular time period.

Stagflation

A stalled economy faced with rising prices for goods and services.

Supply-Side Economics

Reducing government's role in business by decreasing taxes and government regulation.