Business Plan

a written document that describes in detail how a new business is going to achieve its goals.

Consumer

a person who purchases goods and services for personal use.

Target Market

a particular group of consumers at which a product or service is aimed. Example: Schools are a key target market for education apps such as Edmodo.

Price and Gross Margin

the difference between revenue and cost before accounting for certain other costs. Generally, it is calculated as the selling price of an item, less the cost of goods sold.

Competitive Analysis

an assessment of the strengths and weaknesses of current and potential competitors.

Regulatory Restriction

rules used by the government to define what corporations are allowed and not allowed to do.

Product Life Cycle

the period of time over which a product or service can be used.

Scarcity

the inability to satisfy all wants at the same time. All resources and goods are limited. This requires that choices be made.

Resources

factors of production that are used in the production of goods and services. Types include natural, human, capital, and entrepreneurship.

Choice

is selection of an item or action from a set of possible alternatives. Individuals must choose or make decisions about desired goods and services because these goods and services are limited.

Opportunity Cost

what is given up when a choice is made�i.e., the highest valued alternative is forgone. Individuals must consider the value of what is given up when making a choice.

Incentives

things that incite or motivate. Used to change economic behavior.

Supply

the amount of a good or service that producers are willing and able to sell at a certain price.

Demand

the amount of a good or service that consumers are willing and able to buy at a certain price.

Production

the combining of human, natural, capital, and entrepreneurship resources to make goods or provide services. Resources available and consumer preferences determine what is produced.

Consumption

The using of goods and services. Consumer preferences and price determined what is purchased and consumed.

Profit

Consists of earnings after all expenses have been paid.

Competition

Rivalry between producers and/or between sellers of a good or service usually results in better quality goods and services at lower prices.

Partnership

A form of business organization with two or more owners who share the risks and the profits.

Corporation

A form of business organization that is authorized by law to act as a legal entity regardless of the number of owners. Owners share the profits. Owner liability is limited to the amount of their investment.

Entrepreneur

a person who takes a risk to produce and sell goods and services in search of profit. May establish a business according to any of the three types of organizational structures.

FCC

Federal Communication Commission

EPA

Environmental Protection Agency

The 16th Amendment

authorizes Congress to tax personal and business incomes.

The Federal Reserve System

has the duty to maintain the value of the national currency (dollar). Regulates banks to ensure the soundness of the banking system and the safety of deposits. Manages the amount of money in the economy to try to keep inflation low and stable. Acts as the

FTC

Federal Trade Commission

Proprietorship

A form of business organization with one owner who takes all the risks and all the profits.

Price

the amount of money exchanged for a good or service. Interaction of supply and demand determines price. Determines who acquires goods and services.