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; the amount of money a business pays for the products (or for any part of the products) it sells

Direction 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 (income from sales-cost of goods=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

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 (gross profit-operating expense=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 (income-expense=profit)

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