Understanding the u.s. business system

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Understanding the U.S. Business System

Business.- An organization that provides goods or services to earn profits.

Profits.- The difference between a business’s revenues and its expenses.Economic System.- A Nation’s system for allocating its resources among its citizens.

Factors of Production.- Resources used in the production of goods and services (labor, capital, entrepreneurs,physical resources, and information resources).

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

Input Market.- Market in which firms buy resources formsupplier households.

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

Capitalism.- Market economy that provides for privateownership of production and encourages entrepreneurship by offering profits as an incentive.

Socialism.- Planned Economic system in which the government owns and operates only selected major sources ofproduction.

Demand.- The willingness and ability of buyers to purchase a good or service.
Supply.- 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 forsale as its price rises and less as its price drops.

Surplus (superávit o excedente).- Situation in which quantity supplied exceeds quantity demanded.

Shortage (escasez).- Situation inwhich quantity demanded exceeds quantity supplied.

Private Enterprise (Iniciativa Privada).- Economic system that allows individuals to pursue(perseguir) their own interests without undue(excesiva)governmental restriction.

Competition.- Vying(Competencia, esfuerzo, trabajo) among businesses for the same resources or customers.

Perfect competition.- Market or industry characterized by...
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