BUAD100 Study GuideDefinition List• Absolute Advantage: exists when a country has a monopoly on producing a product or is able to produce it more efficiently than all othercountries.• Assets: are the economic resources of a business that are expected to be of benefit in the future• Balance of Payments: difference between money coming into a country(exports) and money leaving the country (imports, plus money flows from other factors such as tourism, foreign aid, military expenditures and foreign investments.)• Balance of Trade: nation’s relationship of exports and imports• Business: a business is any activity that seeks profit by providing goods and services to others.• Capitalism: an economic system in which all or most of the means of production and distribution are privately owned and operated for profit.• Codes of Ethics: 1.formal statement of principles and rules of Conduct. 2.Formalized rules and standings that describes what a company expects of its employees• Communism: system where all economic decisions are made by the state and the state owns all the major forms of production.• Comparative Advantage: a country should sell to other countries these products that it produces more efficiently and should buy from other countries those products it cannot produce as effectively or efficiently.• Competition: alternative firms that could provide a good or service, now or in the future, to satisfy a need or want of a target market.• Conflict of Interest: occurs when a person must choose whether to advance their own personal interest or those of others.• Consumer Price Index (CPI): measures the pace of inflation or deflation in an area of consumer goods.• Culture: set of ideas, values, ideas and attitudes that are learned/shared among members of a group.• Cyclical Unemployment: recession or downturn in the business cycle.• Demand: quantity of products that people are willing to buy at different prices at a specific time.• Demographics: describing the population in terms of characteristics, such as: age, gender, ethnicity, income and occupation.• Devaluation: lowering the value of nation’s currency relative to other countries.• Discretionary income: what remains after paying taxes and necessities.• Disposable income: what remains after paying taxes to purchase necessities; food, shelter, clothing and transportation (basic needs).• Diversification: if a business is in decline in terms of its long-term benefits then developments would be made in an entirely different business/industry.• Dumping: practice of selling products for less in a foreign country than is charged in the producing countries• Economics: the study of how society chooses to employ resources to produce goods and services and to distribute them for consumption among various competing groups and individuals.• Economy: income, expenditures and resources that affect the cost of running a business and household.• Electronic Commerce: any business activity that uses some form of electronic communication to conduct business.• Embargo: complete ban on the import or export of certain products.• Entity Concept: sole proprietorship- keep business’s accounting records separate from your personal records so that you can evaluate the success or failure of the business. If your personal records get mixed up with your business’s accounting records, it may become difficult to tell how well the business is performing.• Entrepreneurs: people who organize, operate, and assume the risk of starting a business.• Environmental Scanning: the process of continuously acquiring information on events occurring outside the organization to identify political trends.• Equilibrium: market price, the point where supply and demand intersect.• Ethics: how we apply our values and principles, what is right, just or wrong, on a daily basis.• Exchange rate: the value of one nation’s currency relative to the currencies of other countries.• Expenses: are decreases in owner’s equity that occur from using assets orincreasing liabilities in the course of delivering goods or services to customers.• Exporting: selling products to another country • Floating Exchange Rate: currencies “float” according to supply and demand in the currency market.• Foreign Subsidiaries: company owned by another company in a foreign company. • Franchise Agreement: an arrangement whereby someone with a good idea for a business (the Franchisor) sells the rights to use the business name and to sell a product or service (the Franchise) to others (the Franchisee) in a given territory.• Free Trade: the movement of goods and services among nations without political or economic obstruction.• Frictional Unemployment: people who have quit work, didn’t like the job, boss or working conditions.• Goals/Objectives: convert the mission into targeted levels of performance to be achieved, often by a specific time. Goals tell the “score”,i.e. how we are doing in achieving our mission.• Gross Domestic Product (GDP): total value of a country’s output of goods and services in a given year.• Gross income: total annual income• Import Quota: limiting the number of products in certain categories.• Importing: buying products from another country• Joint Venture: partnership in which companies join to undertake a majorproduct.• Laws: are society’s values and standards that are enforceable in the courts• Liabilities: are “outsider claims,” debts that are payable to outsiders.• Licensing: granting to a foreign company the right to manufacture its products or use its trademark on a fee basis.• Macroeconomics: part of economic study that deals with the operation of the nation’s economy as a whole.• Market Development: adding a completely different target group to sell to.• Market Penetration: increase business size by giving existing customers additional incentive to buy. Increasing consumption (promotional incentive).• Market share: ratio of sales revenue of the firm to the total sales revenue of all the firms in the industry, including the firm itself.• Market: where decisions about what to produce, in what quantities and what price to charge are determined.• Microeconomics: part of economic study that looks at the behavior of consumers and organizations in particular markets.• Mission: a statement of the organization’s scope, often identifying its customers, markets,