Midterm I Key Terms

Midterm I Key Terms - Business Midterm Review Chapter 1 Key...

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Business Midterm Review Chapter 1 Key Terms Business – the exchange of goods, services, or money for mutual benefit or profit. Capitalism – A type of economic system characterized by private ownership of capital, competition among businesses seeking a profit, and consumers’ freedom of choice. Capital resources – Goods produced for the purpose of making other types of goods and services; includes current assets (short-lived like fuel, raw materials, and paper) and fixed capital (long- lived like factory buildings, computers, and railroad cars). Consumer – A person who purchases a good or service for personal use. Economic system – The accepted process by which labor, capital, and natural resources are organized to produce and distribute goods and services in a society. Economics – The study of how a society chooses to use scarce resources to produce goods and services and distribute them to people for consumption. Entrepreneurs – People who take the risks necessary to organize and manage a business and receive the financial profits and nonmonetary rewards. Free enterprise – A system in which private businesses are able to start and do business competitively to earn profits, with a minimal degree of government regulation. Gross domestic product (GDP) – A measure of the economic activity within the physical borders of a country. Labor resources – The human talent, skills, and competence available in a nation. Macroeconomics – The study of inflation, unemployment, business cycles, and growth focusing on the aggregate relationships in a society. Microeconomics – The study of household decision making on what to buy, business pricing decisions, and how markets allocate resources among alternatives. Mixed economy – An economy in which both the government and private business enterprises produce and distribute goods and services. Natural resources – Resources that nature provides in limited amounts, including crude oil, natural gas, minerals, timber, and water. Planned economy – An economy in which the government owns the productive resources, financial enterprises, retail stores, and banks.
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Profit – The difference between business income (revenue) and business expenses (costs); the selling price of a product minus all costs of making and selling it, including taxes. Purchasing power parity (PPP) – The adjustment of relative prices. A relative market basket of consumer goods is compared to the same market basket in terms of the currencies of the two countries. Standard of living – A measure of how well a person or family is doing in terms of satisfying needs with goods and services. Chapter 4 Key Terms Business plan – A formal document indicating what the entrepreneur intends to do to sell enough of the firm’s product or service to make a satisfactory product. Buy out – When a buyer and seller agree on terms involving the inventory, equipment, and price
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This note was uploaded on 05/20/2008 for the course BUS 100 taught by Professor Smith during the Fall '07 term at Chapman University .

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Midterm I Key Terms - Business Midterm Review Chapter 1 Key...

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