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