| A | B |
|---|
| Capitalism | the private ownership of resources by individuals rather than by the government |
| Demand | the quantity of a good or service that consumers are willing to buy at a given price |
| Economic decision making | the process of choosing which needs and wants, among several, will be satisfied using the resources on hand |
| Economic resources | means through which goods and services are produced |
| Economies of scale | the cost advantages obtained due to expansion |
| Equilibrium price and quantity | point at which the supply and demand curves meet |
| Fixed costs | costs that must be paid regardless of how much of a good or service is produced |
| Marginal benefit | measures the advantages of producing one additional unit of a good or service |
| Marginal cost | measures the disadvantages of producing one additional unit of a good or service |
| Needs | those things that a person must have in order to survive |
| Opportunity cost | value of the next-best alternative |
| Profit | difference between the revenues earned by a business and the costs of operating the business |
| Scarcity | occurs when people’s needs and wants are unlimited and the resources to produce the goods and services to meet those needs and wants are limited |
| Supply | the quantity of a good or service a producer is willing to produce at different prices |
| Variable costs | costs that go up and down depending on the quantity of the good or service produced |
| Wants | those things that a person thinks he or she must have in order to be satisfied |
| Business plan | a written document that describes all the steps necessary for opening and operating a successful business |
| Cover letter | a letter that introduces and explains an accompanying document or set of documents |
| Executive summary | a short restatement of the report portion of a business plan |
| Harvest strategy | an exit strategy, or the way an entrepreneur intends to extract, or harvest, his or her money from a business after it is operating successfully |
| Pro forma financial statement | a financial statement based on projected revenues and expenses |
| Service Corps of Retired Executives (SCORE) | group made up of retired executives who volunteer their time to provide entrepreneurs with real-world advice and know-how |
| Small Business Administration (SBA) | independent agency of the federal government that was created to help Americans start, build, and grow businesses |
| Small Business Development Centers (SBDC) | centers that provide management assistance to current and prospective small business owners |
| Statement of purpose | brief explanation of why the writer of a business plan is asking for a loan and an explanation of what he or she plans to do with the money |
| Trade associations | organizations made up of professionals in a specific industry |
| Competitive analysis | identifying and examining the characteristics of a competing firm |
| Customer profile | description of the characteristics of the person or company that is likely to purchase a product or service |
| Customer relationship management | the goal of a new marketing trend that focuses on understanding customers as individuals instead of as part of a group |
| Demographics | data that describe a group of people in terms of their age, marital status, family size, ethnicity, gender, profession, education, and income |
| Direct competition | a business that makes most of its money selling the same or similar products or services to the same market as other businesses |
| Focus group | in-depth interview with a group of target customers who provide valuable ideas on products or services |
| Geographic data | data that help a business determine where its potential customers live and how far they will travel to visit the business |
| Indirect competition | a business that makes only a small amount of money selling the same or similar products and services to the same market as other businesses |
| Market research | system for collecting, recording, and analyzing information about customers, competitors, products, and services |
| Market segments | groups of customers within a large market who share common characteristics |
| Primary data | information collected or the very first time to fit a specific purpose |
| Psychographics | data that describe a group of people in terms of their tastes, opinions, personality traits, and lifestyle habits |
| Secondary data | data found in already-published sources |
| Survey | list of questions to ask customers to find out demographic and psychographic information; can be conducted by mail, over the phone, on the Internet, or in person |
| Target market | the individuals or companies that are interested in a particular product or service and are willing and able to pay for it |
| Use-based data | data that help a business determine how often potential customers use a particular service |
