business midterm review

Needs

things that are necessary for survival

Economic Wants

People's desires that can be satisfied by consuming goods and/or services (things you spend money on)

Noneconomic wants

Desires that can be satisfied through means, other than spending money ie. talking with a friend, watch the sunset, spend time with family

Public wants

Economic wants shared by many people

Public goods

goods which satisfy public wants; paid for by local, state, and federal governement

Economic Goods

physical products that can be seen and touched

Economic Services

tasks that businesses perform for consumers; intangible, not stored, and do not result in ownership.

Consumer Goods/Services

goods/services that are purchased and actually used by the ultimate consumer

Ultimate consumer

Anyone who personally uses a good or service to satisfy his/her own wants.

Industrial goods and services

goods and services that are purchased by producers (the people who make or provide goods and services): For resale, To make other goods and services, or To use in operating their businesses

Producers

businesses which develop products for distribution from raw goods

Extractors

a business that grows products or takes raw materials from nature

Manufacturers

A type of producer that changes the shapes or forms of materials so that they will be useful to customers

Custom Manufacturing

building a specific and unique product to meet the needs of one customer

Mass Production

the efficient production of large numbers of identical goods

Processing

changing the form of the raw materials so they can be consumed or used to manufacture other products

Marketers

businesses that move goods from producers to consumers or industrial users

Wholesalers

intermediaries that distribute goods in large quantities to be retailed by others

Retailers

Buy goods from wholesalers or directly from the manufacturers and resell to the consumer

Service Business

a business that provides intangible activities that satisfy the needs and wants of consumers and industrial users

Business

any activity that seeks to provide goods and services to others while operating at a profit

Resources

all things used in producing goods and services

Profit

the money left over after all expenses have been paid

Financial Analysis

the process of planning, maintaining, monitoring, controlling, and reporting the use of financial resources.

Start-up Capital

money needed/used to start a new business

Operating Capital

money needed/used to keep a business going

Venture Capital

Money that is invested in new or emerging companies by angel investors

Debt

Money businesses borrow for start-up or operating expenses and must be paid back; Loans/bonds

Equity

what a business owns or controls minus its debts

Assets

things of value owned by a business

Accounting

Keeping accurate and useful financial records and analyzing and interpreting the recorded information.

Human resources management

the process of planning, staffing, leading, and organizing employees.

Information Management

the process of accessing, processing, maintaining, evaluating, and disseminating business knowledge, facts, or data

Marketing

all the activities in the marketplace involved in creating an exchange that satisfies customers.

Operations

the day-to-day activities required for continued business functioning.

quality control

the strategy for minimizing errors by managing each stage of production

purchasing

the function in a firm that searches for high-quality material resources, finds the best suppliers, and negotiates the best price for goods and services

inventory management.

The process of buying and storing materials and products while controlling costs for ordering, shipping, handling, and storage.

Strategic Management

the process of planning, controlling, and organizing an organization or department.

Consumption

the process or activity of using goods and services.

Production

The process of creating goods and services

Distribution

the process or activity by which income is divided among resource owners and producers.

Exchange

form of payment for the use of ones resources

usually, in the form of money.

Consumer

A person who purchases goods and services for personal use

Dollar Vote

Buying - or Not Buying - certain goods and services

Demand

the quantity of a good or service that consumers are willing and able to buy

Buying Power

The ability to purchase goods and services, usually depending on income

Law of Demand

All other things being equal, the quantity demanded of a good will change (rise/fall) inversely with prices

Supply

The quantity of a good or service that producers are able and willing to offer for sale at a certain price

Law of Supply

All other things being equal, the quantity supplied will change (rise/fall) directly with prices

equilibrium price

the price at which the quantity demanded equals the quantity supplied

Surplus

A situation in which quantity supplied is greater than quantity demanded

Shortage

A situation in which quantity demanded is greater than quantity supplied

Labor Productivity

The quantity of a good that an average worker can produce in a given time

Standard of Living

The way you live; measured by the kinds and quality of goods and services you can afford

Productivity

the amount and value of goods and services produced from set amounts of resources

Outputs

goods and services produced

Inputs

resources used in producing outputs

Specialization

the concentration of the productive efforts of individuals and firms on a limited number of activities

Division of Labor

Division of work into a number of separate tasks to be performed by different workers

Capital investment

Reinvestment of profits back into a business (for such things as capital)

Competitive advantage

an advantage over competitors gained by offering greater customer value, either by having lower prices or providing more benefits that justify higher prices

Participative decision-making

The involvement of several individuals in making decisions; in business, the participation of employees in decisions to be made by management

Andon Cord

A system that enables a line worker to signal that he or she needs assistance from his or her supervisor, for example in the case of a defect.

Unit Cost

The average production cost per unit

Gross Domestic Product (GDP)

The FINAL MARKET VALUE of the TOTAL OUTPUTS of all goods and services produced WITHIN A COUNTRY'S GEOGRAPHIC BOUNDARIES during a year's time

Intermediate goods

goods used in the production of final goods

Personal Consumption

Household spending on consumer goods and services

Durable goods

goods that last for a relatively long time, such as cars and furniture

Nondurable goods

goods that last less than a year, such as gasoline

Private Domestic Investment

Purchases made by the business sector including investments in both residential and nonresidential buildings, capital goods, and changes in the value of business inventories

Residential investment

Includes construction of new single-family and multifamily structures, residential remodeling, production of manufactured homes, and brokers' fees.

Nonresidential investment

Includes purchases of buildings, equipment, software etc. by businesses

Changes in business inventories

changes in the value of inventories of goods that have been produced but not yet sold

Government Spending

spending by all levels of government on final goods and services

Net Exports

The difference between the value of a country's total exports minus the value of its total imports.

Uncounted production

Items that do not go through the standard markets and are not counted.

Underground economy

unreported legal and illegal activities where money is exchanged but no records or receipts are kept.

Double Counting

counting a good more than once when computing GDP

Inflation

A general and progressive increase in prices

prime interest rate

interest rate at which banks borrow from each other

GDP Per Capita

GDP divided by population; Measurement of the total output per person

Demand-Pull Inflation

Occurs when the money supply out paces the economy

Cost-Push Inflation

When prices rise due to an increase in the cost of production.

Inflation Rate

the percentage increase in the price level from one year to the next

Price stability

when the overall level of prices changes slowly or not at all

Deflation

a decrease in the general level of prices

Hyperinflation

A very rapid rise in the price level; an extremely high rate of inflation.

full employment

the condition in which virtually all who are able and willing to work are employed.

Unemployment rate

Percentage of the labor pool that is currently seeking work but unable to find it.

Lagging indicator

confirms what we already know about the economy, but doesn't necessarily predict future trends.

Frictional unemployment

unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills

structural unemployment

unemployment that results because the number of jobs available in some labor markets is insufficient to provide a job for everyone who wants one

Technological unemployment

unemployment caused by technological developments or automation that make some workers' skills obsolete

Seasonal Unemployment

A type of structural unemployment that affects seasonal employees, such as farm workers, summer-camp counselors, lifeguards, ski-resort employees, etc.

underemployed

working at a job for which one is overqualified, or working part-time when full-time work is desired

Business Cycle

Alternating periods of economic expansion and economic recession

real GDP

GDP adjusted for inflation

Expansion

A period of economic growth as measured by a rise in real GDP