CHAPTER 1

• tangible; something that exists in nature or is made by human beings

  product
• intangible; labor or expertise exchanged for money

  service
• someone who earns a living by working directly for someone else’s business

  employee
• people who have their own businesses work for themselves and are called small business owners

  entrepreneurs
• someone who recognizes an opportunity to start a business that other people may not have noticed and acts on it

  entrepreneur
• buying and selling of products and services

  business
• classical economic theory that states that production is the source of demand

  law of markets
• whose law was the law of matkets

  jean baptiste say
• according to say's law, how does production create demand?

  one product and can be exchanged for another
• something of value that can be used to make something else or fill a need

  scarce resource
• how do entrepreneurs add value to scarce resources

  by shifting them from areas of lower to highee productivity
• how do entrepreneurs add value to scarce resources

  by shifting them from areas of lower to highee productivity
• resources that are worth money, regardless of their relative availability

  scarce
• the wealth and resources of a country or region, including its financial structure

  economy
• something tangible that exists in nature or is made by people

  product
• intangible work that provides time, skills, or expertise in exchange for money

  service
• a person who recognizes an opportunity and organizes and manages a business, assuming the risk for the sake of potential return

  entrepreneur
• economic system in which businesses are privately owned and operate relatively free of government interference

  free-enterprise system
• economic system wherein the government places very few restrictions on the types of business activities or ownership in which citizens participate in

  free-enterprise system
• the free-market system, characterized by individuals and companies competing for economic gains, ownership of private property and wealth, and price determination through free-market forces

  capitalism
• cash or goods invested to generate income and wealth

  capital
• money or property owned or used in business

  capital
• a transaction between two parties who agree to trade money for a product or service

  voluntary exchange
• 0-500 fulltime employees

  small business
• business selling less than $5 million worth of products and services annually

  small business
• key to wealth

  ownership
• 8 potential benefits of entrepreneurship

  control over time,

  fulfillment,

  independence/autonomy,

  creation/ownership,

  control over compensation,

  control over working conditions,

  self-esteem,

  contribution to society
• fixed amount of money paid to an employee at regular intervals

  salary
• fixed payment per hour for work performed

  wage
• each stockholder’s portion of the profit-per-share paid out by a corporation

  dividend
• percentage of a sale paid to a salesperson

  commission
• 6 potential costs of entrepreneurship

  business failure,

  obstacles,

  loneliness,

  financial insecurity,

  long hours,

  strain on personal relationships
• a decision-making process in which the costs of taking an action are compared to the benefits

  cost/benefit analysis
• the money, energy, and time you will have to invest, as well as the opportunities you will be giving up, to operate the business

  cost
• the wealth you will accrue and the knowledge, skills, selfesteem, and experience you will gain

  benefit
• the value of what must be given up in order to obtain something else

  opportunity cost
• listing costs and benefits to make decisions that are not emotional

  cost/benefit analysis
• cost of the next best investment

  opportunity cost
• keys to avoid making mistakes

  preparation, planning
• trusted advisor with whom a person forms a developmental partnership through which information, insight, skills, and knowledge are shared to promote personal and/or professional growth

  mentor