An organisation that provides goods or services to earn profit.

The difference between a business’s revenues and its expenses.

Economic System:
A Nation’s System for allocating its resources among its citizens

Factor of Production:
Resources used in the production of goods and services, natural resources, labour, capital, and entrepreneurs.

Labour (or human resources):
The physical and mental capabilities of people as they contribute to economic production.

The funds needed to create and operate a business enterprise

Physical resources:
Tangible things organizations use in the conduct of their business

Information resources :
Data and other information used by business

Planned economy:
Economy that relies on a centralized government to control all or most factors of production and to make all or most production and allocation decisions.

Market economy:
Economy in which individuals control production and allocation decisions through supply and demand.

Mechanism for exchange between buyers and sellers of a particular good or service.

Input market:
Market in which firms buy resources from supplier households

Output market:
Market in which firms supply goods and services in response to demand on the part of households

Market economy that provides for private ownership of production and encourages entrepreneurship by offering profits as an incentive

Mixed market economy:
Economic system featuring characteristics of both planned and market economies.
Privatisation: process of converting government enterprises into privately owned companies

Planned economic system in which the government owns and operates only selected major sources of production.

The willingness and ability of buyers to purchase a good or service

The willingness and ability of producers to offer a good or service for sale

Law of demand:
Principle that buyers will purchase (demand) more of a product as its price drops and less as its price increases.

Law of supply:
Principle that producers will offer (supply) more of a product for sale as its price rise and less as its price drops.

Demand and supply schedule:
Assessment of the relationships between different levels of demand and supply at different price levels.

Demand curve:
Graph showing how many units of a product will be demanded (bought) at different prices.

Supply curve:
Graph showing how many units of a product will be supplied (offered for sale) at different price

Market price (or equilibrium price):
Profit-maximizing price at which the quantities of goods supplied are equal

situation in which quantity supplied exceeds quantity demanded

situation in which quantity demanded exceeds quantity supplied

Private enterprise:
Economic system that allows individuals to pursue their own interests without undue governmental restriction.

Private property right:
The right to buy, own, use, and sell almost any form of property.

Vying among businesses for the same resources or customers.

Pure competition:
Market or industry characterized by numerous small firms producing an identical product

Monopolistic competition:
Market or industry characterized by numerous buyers and relatively numerous sellers trying to differentiate their products from those of competitors

Market or industry characterized by a handful of (generally large) sellers with the power to influence the prices of their products

Market or industry in which there is only one producer, which can therefore set the prices of its products.

Natural monopoly:
Industry in which one company can most efficiently supply all needed goods or services.

Condition in which the balance between the money available in an economy and the goods produced in it are growing at about the same rate

Phenomenon of widespread price increases throughout an economic system

Period characterized by decreases in employment, income, and production

Particularly severe and long lasting recession

Level of joblessness among people actively seeking work

Knowledge workers:
Skilled employees in high-tech industries

Increase in the amount of goods and service produced by nation’s resources

Gross National Product (GNP)
The value of all goods and services produced by an economic system in a year regardless of where the factors of production are located

Real gross national product:
Gross national product adjusted for inflation and changes in the value of a country’s currency

Gross Domestic Product:
The value of all goods and services produced in a year by nation’s economy through domestic factors of production

Measure of economic growth that compares how much a system produces with the resources needed to produce it

Budget deficit:
Situation in which a government body spends more money than it takes in

National debt:
Total amount that a nation owes it creditors

Monetary policies:
Government economic policies that determine the size of nation’s money supply


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