Business Essentials Key Terms: Ethics, Economics, Business Operations, and Management

Comprehensive vocabulary flashcards covering key definitions from Business Essentials Units 1 through 6, including personal ethics, business fundamentals, economic principles, market structures, business risk, and core management functions.

Ethics

The basic principles that govern your behavior.

Ethical Principles

Standards that govern behavior; not dependent on circumstance.

Ethical Situation

An issue in which you must decide whether something is right or wrong.

Integrity

Adhering to an established set of personal ethics and sound moral principles; acting with honesty in all situations.

Trustworthy

Reliable; deserving the confidence of others.

Accountability

The condition of having to answer for or be liable for your actions; accepting responsibility for your decisions.

Transparency

The quality of being just as one seems; being open and truthful when communicating.

Fairness

The ability to make judgments without favoritism or self-interest; engaging in fair competition and creating equal relationships.

Respect

Regard or esteem; honoring the rights, freedoms, views, and property of others.

Rule of Law

Complying with laws and regulations.

Viability

The long-term value of your choices.

Arrogance

An inflated sense of self-importance.

Consequence

The result of an action.

Dilemma

A difficult situation in which you are required to make a decision.

Ethical Dilemma

An issue in which you must decide whether something is right or wrong; sometimes referred to as an ethical situation.

Intuition

Instinct; gut feeling.

Role Model

A person whose behavior is imitated by others.

Brick and Mortar

A business that operates out of a physical facility (instead of online).

Builders

A type of producer that constructs roads, bridges, buildings, houses, etc.

Consumers

People who use goods and services to satisfy their wants.

E-tailers

Retailers who operate solely online.

Manufacturer

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

Producers

The people who make or provide goods and services.

Raw-Goods Producer

A type of producer that provides goods in their natural state.

Retailer

A business that buys consumer goods or services and sells them to the ultimate consumer.

Service Business

A type of business that performs intangible activities that satisfy the needs and wants of consumers or industrial users.

Social Responsibility

The duty of business to contribute to the well-being of society.

Trade Industries

Businesses that buy and sell goods to others; retailers and wholesalers.

Wholesalers

Intermediaries who help move goods between producers and retailers by buying goods from producers and selling them to retailers.

Capital Goods

Manufactured or constructed items that are used in the production of goods and services.

Consumer Goods and Services

Products produced for personal consumption.

Consumption

The process or activity of using goods and services; the economic process or activity of using goods and services.

Demand

The quantity of a good or service that buyers are ready to buy at a given price at a particular time.

Distribution

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

Economic Goods

Physical objects that are useful, scarce, and transferable and which satisfy economic wants.

Economic Resources

The human and natural resources and capital goods used to produce goods and services.

Economic Services

Productive acts that are useful, scarce, and transferable and which satisfy economic wants.

Economic Want

A desire for something that can only be satisfied by spending money.

Economics

The study of how to meet unlimited, competing wants with limited resources.

Elastic Demand

A form of demand for products in which changes in price correspond to changes in demand.

Elasticity

An indication of how changes in price will affect changes in the amounts demanded and supplied.

Equilibrium

The point at which the quantity supplied is equal to the quantity demanded.

Excess Demand

The situation that exists when demand is greater than supply.

Excess Supply

The situation that exists when supply is greater than demand.

Exchange

The economic process of trading one good/service for another.

Factors of Production

Productive resources; human and natural resources and capital goods.

Human Resources

People who work to produce goods and services.

Industrial Goods and Services

Products purchased by producers for resale, to make other goods and services, and/or to use in business operations.

Inelastic Demand

A form of demand in which changes in price do not affect demand.

Law of Demand

Economic principle which states that the quantity of a good or service that people will buy varies inversely with the price of the good or service.

Law of Supply

Economic principle which states that the quantity of a good or service that will be offered for sale varies in direct relation to its price.

Law of Supply and Demand

Economic principle which states that the supply of a good or service will increase when demand is great and decrease when demand is low.

Natural Resources

Items found in nature that are used to produce goods and services.

Need

Something required or essential that is lacking.

Noneconomic Want

Desires for things that can be obtained without spending money.

Opportunity Cost

The benefit that is lost when you decide to use scarce resources for one purpose rather than for another.

Price

The amount of money paid for a good, service, or resource.

Production

The process or activity of producing goods and services.

Scarcity

A condition resulting from the gap between limited resources and unlimited wants for goods and services.

Supply

The quantity of a good or service that sellers are able and willing to offer for sale at a specified price in a given time period.

Trade-off

Giving up all or a part of one thing in order to get something else.

Want

A desire for something that is not required.

Command Economy

An economic system in which all or many of the means of production and distribution are owned and controlled by the government.

Communism

A command economic system in which the government controls the economic system and does not allow private ownership of the means of production and distribution.

Economic System

The organized way in which a country handles its economic decisions and solves its economic problems.

Market Economy

An economic system in which the questions of what, how, and for whom goods will be produced are answered by individuals and businesses in the marketplace.

Socialism

A modified command economic system in which government owns the basic means of production and allows private ownership of businesses as well.

Traditional Economy

An economic system in which people produce only what they must have in order to exist; all economic decisions are based on habit and tradition.

Entrepreneur

An individual who: invents, develops, and distributes a good or provides a service; assumes the risks of starting and building a business; and receives personal and financial rewards for her/his efforts.

Private Enterprise / Free Enterprise

An economic system in which individuals and groups, rather than the government, own or control the means of production—the human and natural resources and capital goods used to produce goods and services.

Small Business

A business that employs 500 or fewer people.

Avoidance

A risk-response strategy that involves choosing not to do something that is considered risky.

Business Risk

The possibility of loss (failure) or gain (success) inherent in conducting business.

Competition

The rivalry between two or more businesses to attract scarce customer dollars.

Cost of Goods

The amount of money a business pays for the products it sells or for the raw materials from which it produces goods to sell; the amount of money a business pays for the products (or for any part of the products) it sells.

Direct Competition

Rivalry between or among businesses that offer similar types of goods or services.

Economic Risks

The possibility of loss or failure that occurs as a result of the economy.

Expenses

The money that a business spends.

Gross Profit

Money left after the cost-of-goods expense is subtracted from total income ($\text{income from sales} - \text{cost of goods} = \text{gross profit}$).

Human Risks

The possibility of loss or failure from human error.

Income

The money received by resource owners and by producers for supplying goods and services to customers.

Indirect Competition

Rivalry between or among businesses that offer dissimilar goods or services.

Market Structure

The type of market, or environment, in which businesses operate.

Monopoly

A type of market structure in which a market is controlled by one supplier, and there are no substitute goods or services readily available.

Natural Risks

The possibility of loss or failure from nature.

Net Profit

Money left after the cost-of-goods expense and the operating expense are each subtracted from the total income ($\text{gross profit} - \text{operating expense} = \text{net profit}$).

Nonprice Competition

A type of rivalry between or among businesses that involves factors other than price.

Oligopoly

A market structure in which there are relatively few sellers, and industry leaders usually determine prices.

Operating Expenses

All of the expenses involved in running a business.

Perfect Competition

A market structure in which there are many businesses selling a lot of identical products for about the same price to many buyers; also known as pure competition.

Price Competition

A type of rivalry between or among businesses that focuses on the use of price to attract scarce customer dollars.

Profit

Monetary reward a business owner receives for taking the risk involved in investing in a business; income left once all expenses are paid ($\text{income} - \text{expense} = \text{profit}$).

Profit Motive

The desire to make a profit, which moves people to invest in business.

Pure Risks

Chances of loss that carry with them the possibility of loss or no loss.

Reduction

A risk-response strategy that involves trying to reduce the chance of loss or severity of loss.

Regulated Monopolies

Monopolies that the government allows to exist legally under controlled conditions.

Retention

A risk-response strategy that involves assuming responsibility for the risk rather than transferring it.

Speculative Risks

Chances of loss that may result in loss, no change, or gain.

Transfer

A risk-response strategy that involves moving the impact of a risk to someone or something else.

Accounting

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