value
the relationship between the price of a good or a service and the benefits that it offers its customer
Business
any organization or activity that provides goods and services in an effort to earn a profit
Profit
The money that a business earns in sales, minus expenses, such as the cost of goods, and the cost of salaries. Revenue - expenses= profit (or loss).
loss
when a business incurs expenses that are greater than its revenue
entrepreneurs
people who risk their time, money, and other resources to start and manage a business
Standard of living
The quality and quantity of goods and services available to a population
Quality of life
the overall sense of well-being experienced by either an individual or group
nonprofits
Business-like establishments that employ people and produce goods and services with the fundamental goal of contributing to the community rather than generating financial gain
Factors of production
Four fundamental elements- natural resources, capital, human resources, and entrepreneurship- that businesses need to achieve their objectives.
Business Environment
The setting in which business operates. The five key components are: economic environment, competitive environment, technological environment, social environment, and global environment.
Speed-to-market
The rate at which a new product moves from conception to commercialization
Business technology
Any tools- especially computers, telecommunications,and other digital products- that businesses can use to become more efficient and effective
World wide web
The service that allows computer users to easily access and share information on the internet in the form of text, graphics, video, apps, and animation
e-commerce
Business transactions conducted online, typically via the internet
demographics
The measurable characteristics of a population. Demographic factors include population size and density, as well as specific traits such as age, gender, and race.
Free trade
An international economic and political movement designed to help goods and services flow more freely across international boundaries
General Agreement on Tariffs and trade(Gatt)
An international trade agreement that has taken bold steps to lower tariffs and promote free trade worldwide
Economy
a financial and social system of how resources flow throw society, from production, to distribution, to consumption.
Economics
The study of the choices that people, companies, and governments make in allocating society's resources.
Macroeconomics
the study of a country's overall economic dynamics, such as the employment rate, the gross domestic product, and taxation policies.
Microeconomics
The study of smaller economic units such as individual consumers, families, and individual businesses.
Fiscal Policy
Government efforts to influence the economy through taxation and spending
Budget Surplus
Overage that occurs when revenue is higher than expenses over a given period of time.
Budget deficit
Shortfall that occurs when expenses are higher than revenue over a given period of time
Federal Debt
The sum of all the money that the federal government has borrowed over the years and not yet repaid
Monetary Policy
Federal reserve decisions that shape the economy by influencing interest rates and the supply of money.
Commercial Banks
Privately owned financial institutions that accept demand deposits and make loans and provide other services for the public
Money supply
the total amount of money within the overall economy
Money
anything generally accepted as a medium of exchange, a measure of value, or a means of payment.
M1 Money supply
includes all currency plus checking accounts and traveler's checks.
M2 Money supply
Includes all of M1 money supply plus most savings accounts, money market accounts, and certificates of deposit.
Open Market Operations
The federal reserve function of buying and selling government securities, which include treasury bonds, notes, and bills.
Discount Rate
The rate of interest that the federal reserve charges when it loans funds to banks
Federal Deposit Insurance Corporation
A federal agency that insures deposits in banks and thrift institutions for up to 250,000 per customer, per bank
Reserve requirement
a rule set by the fed, which specifies the minimum amount of reserves a bank must hold, expressed as a percentage of the bank's deposits
economic system
a structure for allocating limited resources
capitalism
an economic system- also know as the private enterprise or free market system- based on private ownership, economic freedom, and fair competition
Pure competition
a market structure with many competitors selling virtually identical products. Barriers to entry are quite low
Monopolistic Competition
A market structure with many competitors selling differentiated products. Barriers to entry are low
Oligopoly
a market structure with only a handful of competitors selling products that can be either similar or different. Barriers to entry are typically high.
Monopoly
a market structure with one producer completely dominating the industry, leaving no room for any significant competitors. Barriers to entry tend to be virtually insurmountable
Natural Monopoly
A market structure with one company as the supplier of a product because the nature of that product makes a single supplier more efficient than multiple competing ones. Most natural monopolies are government sanctioned and regulated.
Supply
The quantity of products that producers are willing to offer for sale at different market prices
Supply curve
The graphed relationship between price and quantity from a supplier standpoint
Demand
the quantity of products that consumers are willing to buy at different market prices
Demand curve
the graphed relationship between price and quantity from a customer demand standpoint
Equilibrium price
The price associated with the point at which the quantity demanded of a product equals the quantity supplied
Socialism
an economic system based on the principle that the government should own and operate key enterprises that directly affect public warfare
Communism
an economic and political system that calls for public ownership of virtually all enterprises, under the direction of a strong central government
Mixed economies
economies that embody elements of both planned and market-based economic systems
opportunity cost
the opportunity of giving up the second best choice when making a decision
absolute advantage
the benefit a country has in a given industry when it can produce more of a product than other nations using the same amount of resources
Comparative advantage
The benefit a country has in a given industry if it can make products at a lower opportunity cost than other countries
Balance of trade
a basic measurement of the difference in value between a nations imports and exports, including both goods and services
Trade surplus
Overage that occurs when the total value of a nation's exports is higher than the total value of imports
Trade deficit
opposite of trade surplus
Balance of payments
a measure of the total money flow into or out of the country
Balance of payments surplus
overage that occurs when more money flows into a nation than out of a nation
Balance of payments deficit
opposite of payment surplus
Exchange rates
a measurement of the value of one nation's currency relative to the currency of other nations
Countertrade
international trade that involves the barter of products for products rather than for currency
Foreign Outsourcing
Contracting with foreign suppliers to produce products , usually at a fraction of the cost of domestic production
Importing
buying products domestically that have been produced or grown in foreign nations
exporting
selling products in foreign nations that have been produced or grown domestically
Foreign licensing
authority granted by a domestic firm to a foreign firm for the rights to produce and market its product or to use its trademark/patent rights in a defined geographical area
Foreign Franchising
a specialized type of foreign licensing in which a firm expands by offering businesses in other countries the right to produce and market its products according to specific operating requirements
Direct investment
when firms either acquire foreign firms or develop new facilities from the ground up in foreign countries
Joint Ventures
When two or more companies join forces -sharing resources, risks, and profits but not actually merging companies- to pursue specific opportunities
Partnership
A voluntary agreement under which two or more people act as co-owners of a business for profit
Strategic Alliance
an agreement between two or more firms to jointly pursue a specific opportunity without actually merging their businesses. typically involves less formal, less encompassing agreements than partnerships
Sociocultural differences
differences among cultures in language, attitudes, and values
Infrastructure
a country's physical facilities that support economic activity
Protectionism
National policies designed to restrict international trade, usually with the goal of protecting domestic businesses.
Tariffs
Taxes leveled against imports
Quotas
Limitations on the amount of specific products that may be imported from certain countries during a given time period
Voluntary export restraints
limitations on the amount of specific products that one nation will export to another nation