| A | B |
|---|
| private sector | Includes all independently owned profit-making firms, nonprofit organizations, and households; all the decision- making units in the economy that are not part of the government. |
| public sector | Includes all agencies at all levels of the government- federal, state, and local. |
| international sector | From any one country's perspective, the economies of the rest of the world. |
| proprietorship | A form of business organization in which a person simply sets up to provide goods or services at a profit. In a proprietorship, the proprietor (or owner) is the firm. The assets and liabilities of the firm are the owner's assets and liabilities. |
| partnership | A form of business organization in which there is more than one proprietor. The owners are responsible jointly and seperately for the firm's obligations. |
| corporation | A form of business organization resting on a legal charter that establishes the corporation as an entity seperate from its owners.Owners hold shares and are liable for the firm's debts only up to the limit of their investment, or share, in the firm. |
| share of stock | A certificate of partial ownership of a corporation that entitles the holder to a portion of the corporation's profits. |
| net income | The profits of a firm. |
| dividends | The portion of a corporation's profits that the firm pays out each period to shareholders. Also called distributed profits. |
| retained earnings | The profits that a corporation keeps, usually for the purchase of capital assets. Also called undistributed profits. |
| industry | All the firms that produce a similar product. The boundaries of a "product" can be drawn very widely("agricultural products"), les widely ("dairy products"), or very narrowly("cheese"). The term industry can be used to interchangeably with the term market. |
| market organization | The way an industry is structured. Structure is defined by how many firms there are in an industry, whether products are differentiated or are virtually the same, whether or not firms in the industry can control prices or wages, and whether or not competing firms can enter and leave the industry freely. |
| perfect competition | An industry structure (or market organization) in which there are many firms, each small relative to the industry, producing virtually identical products and in which no firm is large enough to have any control over prices. In perfectly competitive industries, new competitors can freely enter and exit the market. |
| homogeneous products | Undifferentiated outputs: products that are identical to, or indistinguishable from, one another. |
