Econ

business-sponsored nonprofit organization providing information on local companies to consumers

Better Business Bureau

dollar value of all final goods, services, and structures produced within a country's national borders during a one-year period

Gross Domestic Product (GDP)

rule stating that more will be demanded at lower prices and less at higher prices; inverse relationship between price and quantity demanded

Law of Demand

federal program of disability and retirement benefits that covers most working people

Social Security

court-granted permission to an individual to cease or delay payment on some or all debts for a limited amount of time.

bankruptcy

formal contract to repay borrowed money and interest on the borrowed money at regular future intervals

bond

tools, equipment, and factories used in the production of goods and services; one of four factors of production

capital

tool, equipment, or other manufactured good used to produce other goods and services; a factor of production

capital good

economic system in which private citizens own and use the factors of production in order to generate profits

capitalism

total amount of new funds the business generates from operations; broadest measure of profits for a firm, includes both net income and non-cash charges

cash flow

nonprofit organization of local businesses whose purpose is to promote their interests

chamber of commerce

consumers demand different amounts at every price, causing the demand curve to shift to the left or the right

change in demand

movement along the demand curve showing that a different quantity is purchased in response to a change in price

change in quantity demanded

written government approval to establish a corporation; includes company name, address, purpose of business, number of shares of stock, and other features of the business

charter

process of negotiation between union and management representatives over pay, benefits, and job-related matters

collective bargaining

economic system characterized by a central authority that makes most of the major economic decisions

command economy

the struggle among sellers to attract consumers while lowering costs

competition

products that increase the value of other products; products related in such a way that an increase in the price of one reduces the demand for both

complements

firm with four or more businesses making unrelated products, with no single business responsible for a majority of its sales

conglomerate

good intended for final use by consumers rather than businesses

consumer good

role of consumer as ruler of the market when determining the types of goods and services produced

consumer sovereignty

nonprofit association performing some kind of economic activity for the benefit of its members, also known as, co-op

cooperative

form of business organization recognized by law as a separate legal entity with all the rights and responsibilities of an individual, including the right to buy and sell property, enter into legal contracts, sue and be sued

corporation

way of thinking that compares the cost of an action to its benefits

cost-benefit analysis

nonprofit service cooperative that accepts deposits, makes loans, and provides other financial services

credit union

combination of desire, ability, and willingness to buy a product

demand

graph showing the quantity demanded at each and every possible price that might prevail in the market at a given time

demand curve

listing showing the quantity demanded at all possible prices that might prevail in the market at a given time

demand schedule

gradual wear on capital goods during production

depreciation

decreasing satisfaction or usefulness as additional units of a product are acquired

diminishing marginal utility

check paid to stockholders, usually quarterly, representing portion of corporate profits

dividend

division of work into a number of separate tasks to be performed by different workers; same as specialization

division of labor

feature of taxation that allows stockholders' dividends to be taxed both as corporate profit and as personal income

double taxation

sustained period during which a nation's total output of goods and services increases

economic growth

economic activities in one part of the country or world affect what happens elsewhere

economic interdependence

good or service that is useful, relatively scarce, and transferable to others

economic product

social science dealing with the study of how people satisfy seemingly unlimited and competing wants with the careful use of scarce resource

economics

organized way a society provides for the wants and needs of its people

economy, economic system

risk-taking individual in search of profits; one of four factors of production

entrepreneur

market where productive resources are bought and sold

factor market

productive resources that make up the four categories of land, capital, labor, and entrepreneurship

factors of production

money used to buy the tools and equipment used in production

financial capital

income that does not increase even though prices go up

fixed income

economy in which competition is allowed to flourish with a minimum of government interference; term used to describe the American economy

free enterprise

market economy in which privately owned businesses have the freedom to operate for a profit with limited government intervention; same as private enterprise economy

free enterprise economy

tangible economic product that is useful, relatively scarce, transferable to others; used to satisfy wants and needs

good

combination of two or more firms producing the same kind of product

horizontal merger

sum of peoples' skills, abilities, health, and motivation

human capital

that portion of a change in quantity demanded caused by a change in a consumer's real income when the price of a product changes

income effect

report showing a business's sales, expenses, and profits for a certain period, usually three months or a year

income statement

rise in the general level of prices

inflation

payment made for the use of borrowed money; usually paid at periodic intervals for long-term bonds or loans

interest

stock of goods held in reserve; includes finished goods waiting to be sold and raw materials to be used in production

inventory

people with all their abilities and efforts; one of four factors of production, does not include the entrepreneur

labor

organization that works for its members' interests concerning pay, working hours, health coverage, fringe benefits, other job related matters

labor union

natural resources or "gifts of nature" not created by human effort; one of four factors of production

land

situation in which a firm legally ceases to exist when an owner dies, quits, or a new owner is added; applies to sole proprietorships and partnerships

limited life

form of partnership where one or more partners are not active in the daily running of the business, and whose liability for the partnership's debt is restricted to the amount invested in the business

limited partnership

satisfaction or usefulness obtained from acquiring one more unit of a product

marginal utility

meeting place or mechanism allowing buyers and sellers of an economic product to come together; may be local, regional, national, or global

market

demand curve that shows the quantities demanded by everyone who is interested in purchasing a product

market demand curve

economic system in which supply, demand, and the price system help people make decisions and allocate resources; same as free enterprise economy

market economy

combination of two or more business enterprises to form a single firm

merger

branch of economic theory that deals with behavior and decision making by small units such as individuals and firms

microeconomics

An economy in which some production is done by the private sector and some by the state, in state-owned enterprises.

mixed economy

free enterprise market economy where people carry on their economic affairs freely, but are subject to some government intervention and regulation

modified private enterprise economy

corporation producing and selling without regard to national boundaries and whose business activities are located in several different countries nonprofit organization

multinational

basic requirement for survival; includes food, clothing, and/or shelter

need

measure of business profits determined by subtracting all expenses, including taxes, from revenues

net income

economic institution that operates like a business but does not seek financial gain; schools, churches, community service organizations

nonprofit organization

cost of the next best alternative use of money, time, or resources when one choice is made rather than another

opportunity cost

apparent contradiction between the high value of nonessentials and low value of essentials

paradox of value

unincorporated business owned and operated by two or more people who share the profits and have unlimited liability for the debts and obligations of the firm; same as general partnership

partnership

amount borrowed when getting a loan or issuing a bond

principal

fundamental feature of capitalism, which allows individuals to own and control their possessions as they wish; includes both tangible and intangible property

private property rights

market where goods and services are offered for sale

product market

process of creating goods and services with the combined use of land, capital, labor, and entrepreneurship

production

diagram representing maximum combinations of goods and/or services an economy can produce when all productive resources are fully employed

production possibilities frontier

degree to which productive resources are used efficiently; normally refers to labor, but can apply to all factors of production

productivity

nonprofit organization of professional or specialized workers seeking to improve working conditions, skill levels, and public perceptions of its profession

professional association

extent to which persons or organizations are better off at the end of a period than they were at the beginning; usually measured in dollars

profit

driving force that encourages people and organizations to improve their material well-being; characteristic of capitalism and free enterprise

profit motive

electricity to consumers, usually subject to some government regulations

public utility

fundamental economic problem facing all societies that results from a combination of scarce resources and people's virtually unlimited wants

scarcity

work or labor performed for someone; economic product that includes haircuts, home repairs, forms of entertainment

service

person who owns a share or shares of stock in a corporation

shareholder

unincorporated business owned and run by a single person who has rights to all profits and unlimited liability for all debts of the firm; most common form of business organization in the United States

sole proprietorship

assignment of tasks so that each worker performs fewer functions more frequently; same as division of labor

specialization

quality of life based on ownership of necessities and luxuries that make life easier

standard of living

certificate of ownership in a corporation; common or preferred stock

stock

stockholder person who owns a share or shares of stock in a corporation; same as shareholder,

stockholder

alternatives that must be given up when one is chosen rather than another

trade-off

economic system in which the allocation of scarce resources and other economic activity is the result of ritual, habit, or custom

traditional economy

requirement that an owner is personally and fully responsible for all losses and debts of a business; applies to proprietorships, general partnerships

unlimited liability

ability or capacity of a good or service to be useful and give satisfaction to someone

utility

worth of a good or service as determined by the market

value

combination of firms involved in different steps of manufacturing or marketing

vertical merger

act of buyers and sellers freely and willingly engaging in market transactions; characteristic of capitalism and free enterprise

voluntary exchange

way of expressing or communicating a need; a broader classification than needs

want

sum of tangible economic goods that are scarce, useful, and transferable from one person to another; excludes services

wealth