Economics Business Administration Core Vocabulary (1)

Absolute Advantage

The ability of a country or business to produce a good more efficiently than another.

Accounting Profit

Total revenue minus explicit costs of production.

Aggregate Demand

The total demand for goods and services in an economy at a given time.

Aggregate Supply

The total supply of goods and services that firms in an economy will produce at different price levels.

Allocative Efficiency

A state where resources are used in the most valuable way according to consumer preferences.

Barriers to Entry

Obstacles that make it difficult for new firms to enter a market.

Business Cycle

The recurring fluctuations of expansion and contraction in an economy.

Capital Goods

Goods used to produce other goods, such as machinery and tools.

Command Economy

An economic system in which the government controls production and pricing.

Comparative Advantage

The ability to produce a good at a lower opportunity cost than another producer.

Competition

Rivalry among businesses for customers and market share.

Consumer Goods

Products bought for personal use and consumption.

Consumer Price Index

A measure of changes in the average price of consumer goods over time.

Cost-Benefit Analysis

A process of comparing the cost of an action with the benefits gained.

Demand

The quantity of a good or service that consumers are willing and able to buy at various prices.

Diminishing Marginal Utility

Decreasing satisfaction gained from consuming additional units of a good.

Division of Labor

Splitting production into specialized tasks to increase efficiency.

Economic Interdependence

The reliance of countries or businesses on each other for goods and services.

Economic Resources

Land, labor, capital, and entrepreneurship used to produce goods.

Economies of Scale

Cost advantages gained by increasing production.

Elastic Demand

Demand that changes significantly when price changes.

Entrepreneurship

The ability to take risks and create new products, businesses, or ideas.

Equilibrium Price

The price at which supply equals demand.

Exchange Rates

The value of one currency in terms of another.

Factor Market

The market where resources like labor and capital are bought and sold.

Fiscal Policy

Government use of taxation and spending to influence the economy.

Fixed Costs

Business costs that do not change with production levels.

Free Enterprise

An economic system where individuals can freely produce and trade goods.

GDP (Gross Domestic Product)

Total value of goods and services produced within a country.

Globalization

The increasing integration of economies around the world.

Goods

Physical products that satisfy wants and needs.

Human Capital

Skills and knowledge gained by workers.

Import

Goods purchased by one country from another.

Inflation

A sustained increase in the general price level of goods.

Law of Demand

When price decreases, quantity demanded increases; vice versa.

Law of Supply

When price increases, quantity supplied increases; vice versa.

Marginal Cost

The cost of producing one additional unit of output.

Marginal Revenue

The revenue gained from selling one additional unit.

Market Economy

An economy where decisions are made by individuals and businesses.

Market Equilibrium

Point where supply equals demand.

Market Price

The current price determined by supply and demand.

Market Structure

The organization of a market based on competition level.

Microeconomics

The study of individual markets and decision-making.

Monetary Policy

Central bank actions that influence money supply and interest rates.

Monopoly

Market structure with one dominant seller and high entry barriers.

Monopolistic Competition

Many sellers offering differentiated products.

Natural Monopoly

A market where one supplier is more efficient than multiple competitors.

Needs

Basic requirements for survival.

Oligopoly

Market structure dominated by a few large firms.

Opportunity Cost

The value of the next-best alternative given up.

Price Ceiling

Government-set maximum price for a product.

Price Floor

Government-set minimum price for a product.

Producer Price Index

Measures the average change in selling prices received by producers.

Productivity

How efficiently resources are used to produce goods.

Profit

Revenue minus total costs.

Scarcity

The basic economic problem of limited resources and unlimited wants.

Services

Nonphysical activities that satisfy wants and needs.

Shortage

When quantity demanded exceeds quantity supplied.

Specialization

Focusing on one task to become more efficient.

Standard of Living

Level of wealth, comfort, and material goods available.

Substitute Goods

Goods that can replace each other.

Supply

Quantity of a good producers are willing to make at various prices.

Surplus

When quantity supplied exceeds quantity demanded.

Tariff

A tax placed on imported goods.

Traditional Economy

An economy based on customs and historical practices.

Trade-Off

Giving up one thing to gain another.

Utility

The satisfaction gained from consuming a product.

Wants

Desires that go beyond basic needs.