Business 1105 – Introduction to Business – Mindtap
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CHAPTER 01: EXPLORING THE WORLD OF BUSINESS AND
ECONOMICS
1. Free enterprise: The system of business in which individuals are free to
decide what to produce, how to produce it, and at what price to sell it.
2. Cultural (or workplace) diversity: Differences among people in a
workforce owing to race, ethnicity, and gender.
3. Business: The organized effort of individuals to produce and sell, for a
profit, the goods and services that satisfy society’s needs.
4. E-business: The organized effort of individuals to produce and sell, for a
profit, the goods and services that satisfy society’s needs through the
facilities available on the Internet.
5. Profit: What remains after all business expenses have been deducted
from sales revenue.
6. Stakeholders: All the different people or groups of people who are
affected by an organization’s policies, decisions, and activities.
7. Economics: The study of how wealth is created and distributed.
8. Microeconomics: The study of the decisions made by individuals and
businesses.
9. Macroeconomics: The study of the national economy and the global
economy.
,10. Economy: The way in which people deal with the creation and
distribution of wealth.
11. Factors of production: Resources used to produce goods and
services.
12. Entrepreneur: A person who risks time, effort, and money to start
and operate a business.
13. Capitalism: An economic system in which individuals own and
operate the majority of businesses that provide goods and services.
14. Invisible hand: A term created by Adam Smith to describe how an
individual’s personal gain benefits others and a nation’s economy.
15. Market economy: An economic system in which businesses and
individuals decide what to produce and buy, and the market determines
quantities sold and prices.
16. Mixed economy: An economy that exhibits elements of both
capitalism and socialism.
17. Consumer products: Goods and services purchased by individuals
for personal consumption.
18. Command economy: An economic system in which the government
decides what goods and services will be produced, how they will be
produced, for whom available goods and services will be produced, and
who owns and controls the major factors of production.
19. Productivity: The average level of output per worker per hour.
20. Gross domestic product (GDP): The total dollar value of all goods
and services produced by all people within the boundaries of a country
during a specified time period—usually a one-year period.
,21. Inflation: A general rise in the level of prices.
22. Deflation: A general decrease in the level of prices.
23. Unemployment rate: The percentage of a nation’s labor force
unemployed at any time.
24. Consumer price index (CPI): A monthly index that measures the
changes in prices of a fixed basket of goods purchased by a typical
consumer in an urban area.
25. Producer price index (PPI): An index that measures prices that
producers receive for their finished goods.
26. Business cycle: The recurrence of periods of growth and recession
in a nation’s economic activity.
27. Recession: Two or more consecutive three-month periods of
decline in a country’s GDP.
28. Depression: A severe recession that lasts longer than a typical
recession and has a larger decline in business activity when compared to
a recession.
29. Monetary policies: Federal Reserve’s decisions that determine the
size of the supply of money in the nation and the level of interest rates.
30. Fiscal policy: Government influence on the amount of savings and
expenditures; accomplished by altering the tax structure and by changing
the levels of government spending.
31. Federal deficit: A shortfall created when the federal government
spends more in a fiscal year than it receives.
32. National debt: The total of all federal deficits.
, 33. Competition: Rivalry among businesses for sales to potential
customers.
34. Perfect (or pure) competition: The market situation in which there
are many buyers and sellers of a product, and no single buyer or seller is
powerful enough to affect the price of that product.
35. Supply: An item that facilitates production and operations but does
not become part of a finished product.
36. Demand: The quantity of a product that buyers are willing to
purchase at each of various prices.
37. Market price: The price at which the quantity demanded is exactly
equal to the quantity supplied.
38. Monopolistic competition: A market situation in which there are
many buyers along with a relatively large number of sellers who
differentiate their products from the products of competitors.
39. Product differentiation: The process of developing and promoting
differences between one’s products and all competitive products.
40. Oligopoly: A market (or industry) in which there are few sellers.
41. Monopoly: A market (or industry) with only one seller, and there
are barriers to keep other firms from entering the industry.
42. Standard of living: A loose, subjective measure of how well off an
individual or a society is, mainly in terms of want satisfaction through
goods and services.
43. Domestic system: A method of manufacturing in which an
entrepreneur distributes raw materials to various homes, where families
process them into finished goods to be offered for sale by the merchant
entrepreneur.
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