Business Exploration Chapter 1 Flashcards

A complete list of vocabulary flashcards derived from Chapter 1 notes on business fundamentals, economics, economic systems, market structures, and macroeconomic policies.

Profit-making business

An activity that provides goods or services to consumers for the purpose of making a profit.

Profit

The difference between the revenue that a company brings in from selling goods and services and the costs of generating this revenue.

Goods

Physical tangible products.

Services

Intangible activities or experiences provided to fulfill specific needs or wants.

Not-for-profit organization

A business organization dedicated to fulfilling a specific mission or addressing a societal need without the goal of generating profits for owners, relying on donations, grants, and fundraising.

For-profit social enterprise

A business that, beyond the profit motive, has a social mission built into its business model.

Management

The process of planning for, organizing, directing, and controlling a company's resources so that it can achieve its goals.

Operations

The role or area responsible for designing and overseeing the process that converts resources into goods or services.

Marketing

The activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

Finance

Activities involved in planning for, obtaining, and managing a company's funds.

Financial accountants

Accountants who prepare financial statements to help users, both inside and outside the organization, assess the financial strength of the company.

Managerial accountants

Accountants who prepare information, such as reports on the cost of materials used in the production process, for internal use only.

Information technology

The combination of technologies, procedures, and people who collect and distribute the information needed to make decisions.

Business Environment Framework

A model showing the functional areas of business surrounded by external forces such as technology, economy, consumer trends, government, and corporate citizenship.

Circular Flow Model

A diagram demonstrating how businesses produce goods/services for households in exchange for revenues, while households provide inputs (labor, capital, land/buildings, entrepreneurship) to businesses for income.

Economics

The study of how scarce resources are used to produce outputs—goods and services—that are distributed among people.

Factors of production

The resources used to produce outputs, comprising natural resources, labor, capital, and entrepreneurship.

Entrepreneurship

The skill and creativity needed to bring other resources together to produce a good or service to be sold.

Economic system

The means by which a society makes decisions about allocating resources to produce and distribute products.

Communism

A political system featuring the highest level of government control over allocation and distribution.

Capitalism

An economic system in which most businesses are owned and operated by individuals.

Socialism

An economic system in which industries that provide essential services, such as utilities, banking, and health care, are often government owned.

Mixed market economy

An economic system that relies on both markets and government to allocate resources.

Free market

An economic system based on supply and demand with little or no government interference.

Perfect competition

A market in which many consumers buy standardized products from numerous small businesses where no company is large enough to control price.

Demand

The quantity of a product that buyers are willing to purchase at various prices.

Supply

The quantity of a product that sellers are willing to sell at various prices.

Equilibrium price

The price at which buyers are willing to buy exactly the amount that sellers are willing to sell.

Monopolistic competition

A market in which many sellers supply differentiated products and control prices.

Oligopoly

A market in which a few sellers supply a large portion of all the products sold in the marketplace and control prices.

Monopoly

A market in which there is only one seller supplying products at regulated prices.

Natural monopoly

A monopoly in which, because of the industry's importance to society, one seller is permitted to supply products without competition.

Legal monopoly

A monopoly in which one seller supplies a product or technology to which it holds a patent for $20$ years.

Gross domestic product (GDP)

A measure of the market value of all goods and services produced by a nation's economy in a given year.

Business cycle

The pattern of expansion and contraction in an economy, consisting of prosperity (expansion), recession (decline), depression (restart growing again), and recovery (long-lasting recession).

Full employment

The condition under which about $95\%$ of those who want to work are employed.

Unemployment rate

The percentage of the total labor force that's currently unemployed and actively seeking work.

Price stability

Conditions under which the prices for products remain fairly constant.

Consumer price index (CPI)

An index that measures inflation by measuring the prices of goods purchased by a typical consumer.

Leading economic indicators

Statistical data that predict the status of the economy $3$ to $12$ months in the future.

Lagging economic indicators

Statistical data that measure economic trends after the overall economy has changed.

Monetary policy

Policy used by the Fed to control the money supply and interest rates.

Fiscal policy

Policy that uses the government's power to spend and tax to influence the economy.

National debt

The total amount of money owed by the federal government.