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2.05 key terms
| Term | Definition |
|---|---|
| avoidance | A risk-response strategy that involves choosing not to do something that is considered risky. |
| business risk | The possibility of loss (failure) or gain (success) inherent in conducting business. |
| Competition | The rivalry between two or more businesses to attract scarce customer dollars. |
| Cost of goods | The amount of money a business pays for the products it sells or for the raw materials from which it produces goods to sell; the amount of money a business pays for the products (or for any part of the products) it sells. |
| Direct competition | Rivalry between or among businesses that offer similar types of goods or services. |
| Economic risks | The possibility of loss or failure that occurs as a result of the economy. |
| Expenses | The money that a business spends. |
| Gross profit | Money left after the cost-of-goods expense is subtracted from total income (income from sales - cost of goods = gross profit). |
| Human risks. | The possibility of loss or failure from human error. |
| Income | The money received by resource owners and by producers for supplying goods and services to customers. |
| Indirect competition | Rivalry between or among businesses that offer dissimilar goods or services. |
| Market structure | The type of market, or environment, in which businesses operate. |
| Monopoly | A type of market structure in which a market is controlled by one supplier, and there are no substitute goods or services readily available. |
| Natural risks | The possibility of loss or failure from nature. |
| Net profit | Money left after the cost-of-goods expense and the operating expense are each subtracted from the total income (gross profit - operating expense = net profit). |
| Nonprice competition | A type of rivalry between or among businesses that involves factors other than price. |
| Oligopoly | A market structure in which there are relatively few sellers, and industry leaders usually determine prices. |
| Operating expenses | All of the expenses involved in running a business. |
| Perfect competition | A market structure in which there are many businesses selling a lot of identical products for about the same price to many buyers; also known as pure competition. |
| Price competition | A type of rivalry between or among businesses that focuses on the use of price to attract scarce customer dollars. |
| Profit | Monetary reward a business owner receives for taking the risk involved in investing in a business; income left once all expenses are paid (income – expense = profit). |
| Profit motive | The desire to make a profit, which moves people to invest in business. |
Created by:
sheyla07
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