Glossary
Business, 8e
Chapter 1: Exploring the World of Business




barter a system of exchange in which goods or services are traded directly for other goods and/or services without using money

business "the organized effort of individuals to produce and sell, for a profit, the products and services that satisfy society’s needs"

business cycle the recurrence of periods of growth and recession in a nation’s economic activity






capitalism an economic system in which individuals own and operate the majority of businesses that provide goods and services

command economy "an economic system in which the government decides what will be produced, how it will be produced, who gets what is produced, and who owns and controls the major factors of production"

competition rivalry among businesses for sales to potential customers

consumer products goods and services purchased by individuals for personal consumption






demand the quantity of a product that buyers are willing to purchase at each of various prices

depression a severe recession that lasts longer than a recession

domestic system "a method of manufacturing in which an entrepreneur distributes raw materials to various homes, where families would process them into finished goods to be offered for sale by the merchant entrepreneur"






e-business "the organized effort of individuals to produce and sell, for a profit, the products and services that satisfy society’s needs through the Internet."

economics the study of how wealth is created and distributed

economy the way in which people deal with the creation and distribution of wealth.

entrepreneur "a person who risks time, effort, and money to start and operate a business "






factors of production "land and natural resources, labor, capital, and entrepreneurship"

factory system "a system of manufacturing in which all the materials, machinery, and workers required to manufacture a product are assembled in one place"

federal deficit a shortfall created when the federal government spends more in a fiscal year than it receives

fiscal policy government influence on the amount of savings and expenditures; accomplished by altering the tax structure and by changing the levels of government spending

free enterprise "the system of business in which individuals are free to decide what to produce, how to produce it, and at what price to sell it."






gross domestic product (GDP) the total dollar value of all goods and services produced by all people within the boundaries of a country during a one-year period






inflation a general rise in the level of prices






market economy "an economic system in which businesses and individuals decide what to produce and buy, and the market determines quantities sold and prices "

market price the price at which the quantity demanded is exactly equal to the quantity supplied

mixed economy an economy that exhibits elements of both capitalism and socialism

monetary policies Federal Reserve decisions that determine the size of the supply of money in the nation and the level of interest rates

monopolistic competition a market situation in which there are many buyers along with a relatively large number of sellers who differentiate their products from the products of competitors

monopoly a market (or industry) with only one seller






national debt the total of all federal deficits

natural monopoly an industry requiring huge investments in capital and within which duplication of facilities would be wasteful and thus not in the public interest






oligopoly a market (or industry) in which there are few sellers






product differentiation the process of developing and promoting differences between one’s products and all similar products

productivity the average level of output per worker per hour

profit what remains after all business expenses have been deducted from sales revenue

pure competition "the market situation in which there are many buyers and sellers of a product, and no single buyer or seller is powerful enough to affect the price of that product"






recession two or more consecutive three-month periods of decline in a country’s gross domestic product






specialization the separation of a manufacturing process into distinct tasks and the assignment of different tasks to different individuals

standard of living "a loose, subjective measure of how well off an individual or a society is mainly in terms of want satisfaction through goods and services"

supply the quantity of a product that producers are willing to sell at each of various prices

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