Unit 1 Economics Vocabulary Test Questions

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Scarcity
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Is the condition that results from society not having enough resources to produce all the things people would like to have.
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Economics
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The study of how people try to satisfy seemingly unlimited and competing wants through the careful use of relatively scarce resources.
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Need
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Basic requirement for survival, such as food, clothing and shelter.
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Want
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simply something we would like to have but is not necessary for survival.
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Factors of Production
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Resources required to produce the things we would like to have, are land, capital, labor, and entrepreneurs.
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Land
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“Gifts of Nature” or natural resources not created by people
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Capital
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It’s unique, because it’s the result of production.
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Capital Good
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The tools, equipment, machinery, and factories used in the production of goods and services.
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Labor
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People with all their efforts, abilities, and skills. Includes all people except entrepreneurs.
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Entrepreneur
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A risk-taker in search of profits who does something new with existing resources.
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Gross Domestic Product (GDP)
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The dollar value of all final goods, services, and structures produced within a country’s borders in a 12-month period.
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Resource
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Stocks, money, materials, staff and other things that can function effectively.
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Comprehensive
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It means to complete every bit of that something.
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Good
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A useful, tangible item, such as a book, car, or compact disc player, that satisfies a want.
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Consumer Good
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Goods intended for final use by individuals
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Durable Good
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Any good that lasts three years or more when used on a regular basis. Include both capital goods, such as robot welders, and consumer goods, such as automobiles.
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Nondurable Good
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An item that lasts for fewer than three years when used on a regular basis. Examples are: food, writing paper, and most clothing items.
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Service
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A type of economic product where work is performed for someone.
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Value
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A worth that can be expressed in dollars and cents.
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Paradox of Value
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Where some necessities like water doesn’t cost much but a nonnecessity like a diamond costs too much.
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Utility
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The capacity to be useful and provide satisfaction.
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Wealth
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The accumulation of products that are tangible, scarce, useful, and transferable from one person to another. Including natural resources, factories, stores, houses, motels, theaters, furniture, clothing, books, highways, video games, and even basketballs can be exchanged as tangible items
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Market
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A location or other mechanisms that allow buyers and sellers to exchange a specific product.
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Factor Market
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Where the factors of production are bought and sold. Where entrepreneurs hire labor for wages and salaries, acquire land in return for rent, and borrow money.
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Product Market
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Are markets where producers sell their goods and services.
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Economic Growth
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Occurs when a nation’s total output of goods and services increase over time.
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Productivity
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A measure of the amount of goods and services produced with a given amount of resources in a specific period of time.
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Human Capital
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The sum of people’s skills, abilities, health, knowledge, and motivation. This is a major contribution to productivity of investments.
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Division of Labor
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It improves productivity and is a way of organizing work so that each individual worker completes a separate part of the work. A worker who performs a few tasks many times a day is likely to be more proficient than a worker who performs hundreds of different tasks in the same period.
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Specialization
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Takes place when factors of production perform only tasks they can do better or more efficiently than others.
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Economic Interdependence
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When we rely on others, and others rely on us, to provide most of the goods and services we consume
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Transferable
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*- Able to be transferred or made over to the possession of another person.
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Accumulation
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Gathering of something
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Mechanism
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Parts in a machine that work. Or a process where something takes place of another thing.
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Trade-off
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Alternate choices make by decisions we make.
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Opportunity Cost
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The cost of the next-best alternative.
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Production Possibilities Frontier
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A diagram economists use to represent various combinations of goods and services an economy can produce when all its resources are in use.
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Economic Model
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A simplified equation, graph, or figure showing how something works.
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Cost-Benefit Analysis
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A way of comparing the costs of an action to the benefits received.
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Free Enterprise Economy
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Where consumers and privately owned businesses, rather than the government, make the majority of the WHAT, HOW, and FOR WHOM decisions.
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Standard of Living
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The quality of life based on the ownership of the necessities and luxuries that make life easier.
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Alternative
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Availability of another possibility.
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Assumption
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A thing that is accepted as true or as certain to happen, without proof.
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Economic System
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An organized way of providing for the wants and needs of their people.
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Traditional Economy
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The use of scarce resources
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Command Economy
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A central authority makes the major decisions about what, how, and for whom to produce.
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Market Economy
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People make decisions in their own best interest.
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Market
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An arrangement that allows buyers and sellers to come together to exchange goods and services.
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Capitalism
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An economic system where private citizens own the factors of production.
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Mixed Economy
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Systems that combine elements of all three types.
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Socialism
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A mixed economic and political system in which the gov. owns and controls some, but not all, of the basic productive resources.
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Communism
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A political and economic system where all property is collectively.
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Stagnation
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A prolonged period of slow economic growth, usually with high employment.
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Allocate
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Distribute for a particular purpose.
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Emphasizing
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When you make something more clarified.
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Minimum Wage
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The lowest legal wage that can be paid to most workers.
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Social Security
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A federal program of disability and retirement benefits that covers most working people.
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Inflation
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A rise in the general level of prices.
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Adverse
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To prevent success or development, it may be harmful.
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Accommodate
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Provide lodging or sufficient space for.
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Free Enterprise
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Where resources are privately owned, and competition is allowed to flourish with a minimum of government interference.
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Voluntary Exchange
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The act of buyers and sellers freely and willingly engaging in market transactions.
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Private Property Rights
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Allow people to own and control their possessions as they wish.
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Profit
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The extent to which persons or organizations are better off financially at the end of a specific period than they were at the beginning.
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Profit Motive
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the incentive that encourages people and organizations to improve their material well-being.
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Competition
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The struggle among sellers to attract consumers.
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Consumer Sovereignty
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It recognizes the role of the consumer as sovereign, or ruler, of the market.
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Mixed or modified Free Enterprise Economy
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An unintended consequence of government’s role as protector, provider, regulator and consumer.
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Incentive
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A thing that motivates or encourages one to do something.
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Catalyst
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A person or thing that precipitates an event.
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Regulator
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A person or thing that regulates something, in particular.
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Sole Proprietorship
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A business owned and run by a single individual.
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Proprietorship
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A business owned and run by a single individual. Are basically one-person operations, they comprise the smallest forms of business and have the smallest fraction of total sales.
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Unlimited Liability
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When the owner is personally and fully responsible for all losses and debts of the business.
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Inventory
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A stock of finished goods and parts in reserve.
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Limited Life
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When the firm legally ceases to exist when the owner dies, quits, or sells the business.
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Partnership
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A business that is jointly owned by two or more persons.
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General Partnership
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Where all partners are responsible for the management and financial obligations of the business.
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Limited Partnership
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At least one partner is not active in the daily running of the business.
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Corporation
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A form of business organization recognized by law as a separate legal entity with all the rights of an individual
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Charter
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A government document that gives permission to create a corporation.
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Stock
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Ownership certifies in the firm.
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Stockholder
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AKA investors that the shares are sold to.
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Shareholder
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Stockholder.
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Dividend
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A check that transfers a portion of the corporate earnings.
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Common Stock
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Represents nonvoting ownership shares of the corporation.
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Preferred Stock
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Represents nonvoting ownership shares of the corporation.
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Bond
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A written promise to repay the amount borrowed at a later date.
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Principal
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The amount borrowed
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Interest
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The price paid for the use of another’s money.
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Double Taxation
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When the stockholder dividends are taxes twice.
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Comprise
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Being made up of.
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Entity
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A thing with distinct and independent existence.
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Merger
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A combination of two or more businesses to form a single firm.
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Income Statement
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A report showing a business’s sales, expenses, net income, and cash flow for a period of time, such as three months or a year.
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Net Income
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The funds left over all of the firm’s expenses, including taxes, are subtracted from its sales.
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Depreciation
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A noncash charge the firm takes for the general wear and tear on its capital goods.
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Cash Flow
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The sum of net income and noncash charges, such as depreciation.
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Horizontal Merger
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Which takes places when firms that produce the same kind of product join forces.
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Vertical Merger
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When companies involved in different stages of manufacturing or marketing join together.
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Conglomerate
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A firm that has at least four businesses, each making unrelated products and none responsible for a majority of its sales.
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Multinational
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A Corporation that has a manufacturing or service operations in a number of different countries.
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Internally
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Something in itself.
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Dominant
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Most important, more powerful than their competitor.
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Nonprofit Organization
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Works in a businesslike way to promote the collective interests of its members rather than to seek financial gain for its owners.
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Cooperative
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Co-op
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Co-op
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A voluntary association formed to carry on some kind of economic activity that will benefit its members.
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Credit Union
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A financial organization that accepts deposits from, and makes loans to, employees of a particular company or government agency.
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Labor Union
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An organization of workers formed to represent it is members’ interests in various employment matters.
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Collective Bargaining
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When it negotiates with management over issues such as pay, working hours, health care coverage, vacations, and other job-related matters.
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Professional Association
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Consists of people in a specialized occupation interested in improving the working conditions, skill levels, and public perceptions of the profession.
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Chamber of Commerce
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An organization that promotes the welfare of tis member businesses.
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Better Business Bureau
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A nonprofit organization sponsored by local businesses.
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Public Utility
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Municipal or investor-owned companies that offer products such as water, sewerage, and electric service to the public.
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Analyze
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To examine or detail or structure something.
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Devoting
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To give all or a large part of one’s time or resources to someone.

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