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unit 3 Vocab
Terms in this set (70)
what to buy and at what price
how much to sell and at what price
freely chosen actions between buyers and sellers of goods and services
a buyer and seller working towards satisfactory terms of an exchange of goods or services.
Law of demand
explains how people react to the change of prices
how much people will buy of any item at a certain price
Real income effect
rule stating that people cannot buy the same quantity of a product if its price rises while their income stays the same.
states that if two items satisfy the same need and the price of one rises, people will buy more of the other.
the ability of any good or service to satisfy consumer wants
an additional amount of satisfaction
Law of diminishing marginal utility
rule stating that the additional satisfaction a consumer gets from purchasing a product will lessen with each additional unit purchased.
table showing quantities demanded at different possible prices
downward-sloping line that shows in a graph form the quantities demanded at each possible price.
a product often used with another product.
economic concept dealing with consumers' responsiveness to an increase or decrease in the price of a product.
Price elasticity of demand
economic concept that deals with how much demand varies according to changes in price.
a given rise or fall in a product's price that affects the amount that people are willing to buy.
a product's price change has little impact on how much people buy.
Law of supply
price and quantity supplied move in the same direction.
the amount of a good or service that a producer is willing and able to supply at a specific price.
table showing quantities supplied at different possible prices
upward-sloping line that shows in graph form the quantities supplied at each possible price.
the use of science to develop new products and new methods for producing and distributing goods and services.
Law of diminishing returns
economic rule that says as more units of a factor of production are added to other factors of production, after some point total output continues to increase, but at a diminishing rate.
the price at which the amount producers are willing to supply is equal to the amount consumers are willing to buy.
the quantity demanded is greater than the quantity supplied.
quantity supplied is greater than the quantity demanded.
a legal maximum price that may be charged for a particular good or service.
the distribution of goods and services based on something other than price
underground or illegal market in which goods are traded at prices above there legal maximum prices
a legal minimum price below which a good or service may not be sold.
person who organizes, manages, and assumes the risks of a business in order to gain profit
a beginning business enterprise
Small business incubator
private or government funded agency that assists new businesses by providing advice or low rent buildings and supplies
extra supplies of an item used in a business, such as raw materials or goods for sale.
income received from the sale of goods and/or services; also slips of paper documenting a purchase
business owned and operated by one person
owner of a business
requirement that an owner is personally and fully responsible for all losses and debts of a business.
all items to which a business or households legal claim
business that two or more individuals own and operate.
form of partnership in which one or more partners have limited liability but no voice in management
Limited liability company
type of business enterprise that protects members against losing all of their personal wealth
partnership set up for a specific purpose for a short period of time.
business organization owned by many people but treated by law as though it was a person, meaning that it can own property, pay taxes, and make contracts.
share of ownership in a corporation that entitles the buyer to a certain part of the future profits and assets of the corporation
an owner's responsibility for a company's debts is limited to the size of the owner's investment in the firm
Articles of incorporation
document listing basic information about a corporation that is filed with the state where the corporation will be headquartered.
license to operate granted to a corporation by the state where it is established.
shares of ownership in a corporation that give stockholders voting rights and a portion of future profits.
portion of a corporation's profit paid to its stockholders.
shares of ownership in a corporation that give stockholders a portion of future profits, but no voting rights.
a set of rules describing how stock will be sold and how dividends will be paid.
contract in which one business sells to another business the right to use the franchisor's name and sell its products
the extent to which competition prevails in particular markets
market situation in which there are numerous buyers and sellers, and no single buyer or seller can affect price
market situation in which a single supplier makes up an entire industry for a good or service with no close substitutes.
Barriers to entry
obstacles to competition that prevent others from entering a market.
Economies of scale
low production costs resulting from the large size of output.
exclusive rights to make, use, or sell an invention for a specified number of years.
exclusive right to sell, publish, or reproduce created works for a specified number of years.
industry dominated by few suppliers who exercise some control over price
manufacturer's use of minor differences in quality and features to try to differentiate between similar goods and services.
arrangement among groups of industrial businesses to reduce international competition by controlling the price, production, and distribution of goods.
market situation in which a large number of sellers offer similar but slightly different products and in which each has some control over price.
a board of directors, the majority of whose members also serve as the board of directors of a competing corporation.
federal and state laws passed to prevent new monopolies from forming and to break up those that already exist.
the legal combination of two or more companies that become one corporation.
large corporation made up of smaller corporations dealing in unrelated businesses.
reduction of government regulation and control over business activity.