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Economics terminology
Economic resources
Land, labor, and capital resources that
can be used to produce the goods and
services that people consume; also
known as the factors of production.
Natural resources
Capital
Human resources
Entrepreneurship
Natural resources
Human resources
Capital
The money needed
to start and
operate a business
and the goods
used in the
production of other
goods.
Entrepreneurship
The skills of people who are willing to take the
risk of starting their own business;
entrepreneurs organize the other economic
resources in order to create goods and
services needed and desired in an economy.
Economic utilities
Form utility
Place utility
Time utility
Possession utility
Information utility
Consumer goods
Consumer goods
(cont.)
Specialty
Consumer goods
(cont.)
Shopping
goods:
Merchandise purchased
by the consumer only
after comparison
shopping.
Free-market system
An economic system in which
individuals, not the government,
make important economic
decisions.
Consumers decide how to spend their
money.
Consumer choices determine which
products are offered for sale.
Sellers may charge any price they desire.
Profit
Competition
A rivalry between two or more
businesses to gain as much of the
total market sales or customer
acceptance as possible.
Helps maintain reasonable prices
Provides consumers with new and
improved products
Provides wide selection of products
Competition
Pure competition
Oligopoly
Monopoly
Direct competition
Indirect competition
Price competition
Nonprice competition
Pure competition
A market situation in which no
single company in an industry is
large or powerful enough to
influence or control prices.
Many buyers and sellers
No single buyer or seller controls prices or number
of units sold.
All products sold are very similar to each other.
Companies may enter or exit the industry without
pressure or restraints; the industry is insignificantly
affected when a company enters or exits.
Oligopoly
A market structure in which a
few large, competitive firms
dominate the market.
Firms react to the actions of their competitors.
Monopoly
A market in which there are no
direct competitors; only one
company offers goods or services
for sale and has total control over
products and prices.
U.S. has no textile/apparel monopolies.
Direct competition
Competition between two or more
retailers that utilize the same type of
business format.
Indirect competition
Competition between two or more
retailers that employ different types
of business formats to sell the same
type of goods.
Price competition
Competition
focused on the
selling price of a
product.
Nonprice
competition
Competition based on factors that are
not related to price.
Quality
Customer services
Business location
Business reputation
Qualified salespeople
Business cycle
The fluctuations in the economy over
periods of several years.
Prosperity
Recession
Depression
Recovery
Prosperity
Highest period of economic
growth
Low unemployment
High output of goods and
services
High consumer spending
Consumers willing to spend on
fashion products
Recession
Period of economic
slowdown
Retail sales
decrease
Rising
unemployment
Necessary
products such as
food, housing,
and
transportation
take priority over
fashion products.
Decrease in
consumer
spending
Depression
Prolonged recession
Extremely low
consumer spending
High unemployment
Drastic decrease in
production of
products
Poverty can result.
Fashion products
are not being
purchased.
Recovery
Renewed economic growth and an increase
in output of goods and services
Reduced unemployment
Increased consumer spending