Untitled Flashcards Set

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.

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.

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.

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.

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.

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.

Price competition

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

Profit

Monetary reward a business owner receives for taking the risk involved in investing in a 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

A monopoly 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.