| A | B |
|---|
| business firm | an organization that uses resources to produce goods and services, which are sold to consumers, other firms, or the government |
| sole proprietorship | a business owned by one individual, who makes all business decisions, receives all the profits or takes all the losses of the firm, and is legally responsible for the debts of the firm. |
| personal income tax | a tax paid on a person's income |
| corporate income tax | a tax paid on a corporation's profits |
| unlimited liability | the legal responsibility of a sole proprietor of a business or a partner in a business to pay any money owed by the business. Their personal assets may be used to pay these debts |
| partnership | a business that is owned by two or more co-owners who share any profits the business earns and are legally responsible for any debts incurred by the firm |
| limited partnership | a partnership made up of general partners and limited partners. |
| general partner | a partner who is responsible for the management of the firm and who has unlimited liability |
| limited partner | a partner who cannot participate in the management of the firm and who has limited liability |
| corporation | a legal entity that can conduct business iin its own name in the same way that an individual does. |
| stockholder | a person who owns shares of stock in a corporation |
| stock | a claim on the assets of a corporation that gives the purchaser a share of the ownership of the corporation |
| asset | anything of value to which the firm has legal claim |
| limited liability | a condition in which an owner of a business firm can only lose the amount invested in the firm by him or her |
| dividend | a share of the profits of a corporation distributed to stockholders |
| board of directors | an important decision making body in a corporation |
| bylaws | internal rules of the corporation |
| bond | a statement of debt issued by a corporation (an I.O.U.) The corporation promises to pay a certain sum of money at maturity and also to pay periodic fixed sums until that date |
| face value | dollar amount specified on a bond |
| coupon rate | a percentage of the face value of a bond that is paid out regularly to the holder of the bond |
| cooperative | a business that provides services to its members and is not run for profit. Usually formed when a group of people want to pool their resources to gain some benefit that they, as individuals, could not otherwise obtain |
| franchise | a contract by which a firm lets a person or group use its name and sell its goods in exchange for certain payments being made and certain requirements being met |
| franchiser | the entity that offers a franchise |
| franchisee | the person or group that buys a franchise |
| fixed cost | cost that is the same no matter how many units of a good are produced |
| variable cost | cost that changes with the number of units of a good produced |
| total cost | the sum of fixed costs plus variable costs |
| average fixed cost | fixed cost divided by output |
| average variable cost | variable cost divided by output |
| average total cost | total cost divided by output |
| marginal cost | the change in total cost that results from producing an additional unit of output |
| marginal revenue | the change in total revenue that results from selling an additional unit of output |
| law of diminishing returns | states that if we add additional units of a resource (such as labor) to a resource (such as capital) that is fixed in supply, eventually the additional output produced (as a result of hiring an additional worker) will decrease |
