Midterm #1 - Section 1 Terms The Business Context Economics...

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Section 1 Terms: The Business Context: Economics and Politics Business Products -a good or service with tangible and intangible characteristics that provide satisfaction and benefits Profit – difference between cost of production and price sold at Nonprofit Organizations -business that provides goods and services but does not seek profit Stakeholders -anyone who is concerned with the outcome or success of the business Economics Natural Resources -land; forests, minerals, water, and other things not made by people Human Resources -labor; the physical and mental abilities that people use to produce goods and services Financial Resources -capital; the funds used to acquire the natural and human resources needed to provide products Economic System Communism -a society in which people, without regard to class, own all the nations resources Socialism -an economic system in which the government owns and operates basic industries but individuals own most businesses Capitalism or Free Enterprise - an economic system in which all economic decisions are made without government intervention o Free-Market System -pure capitalism, in which all economic decisions are made w/out government intervention
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o Modified Capitalism – government intervenes and regulates business to some extent (US does this through laws) Mixed Economies -economies made up of elements from more than one economic system Demand Supply Equilibrium Price Competition Pure Competition - the market structure that exists when there are many small businesses selling one standardized product o ex. Agricultural goods, corn, wheat Monopolistic Competition- the market structure that exists when there are fewer businesses than in a pure competition environment and the differences among the goods they sell are small o Ex. Soft drinks, aspirin Oligopoly - the market structure that exists when there are very few businesses selling a product o Ex. Airlines, car industry o Expensive for new businesses to enter the marketplace Monopoly -the market structure that exists when there is only one business providing a product in a given market Economic Expansion - situation when economy is growing and people are spending more money; their purchases stimulate the production of goods and services, which in turn stimulates employment Inflation – widespread increase in prices
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Economic Contraction -a slowdown of the economy characterized by a decline in spending and during which businesses cut back on production and lay off workers Recession -decline in production, employment, and income Unemployment Rate – people over 16, actually looking for a job - frictional : changing jobs, most common -cyclical : due to layoffs, lapse in economy - structural : mismatch in skills and jobs available Depression -condition where unemployment is very high, consumer spending is low, and business output in sharply reduced Gross Domestic Product (GDP)
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