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Chapter 2

BUSI 1800 Chapter Notes - Chapter 2: Oligopoly, Stagflation, Disinflation

Course Code
BUSI 1800
Julie Caldwell

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Chapter 2: How Economic Issues Affect Business
Key Terms:
Economics: the study of how society chooses to employ resources to produce goods and
services and distribute them for consumption among various competing groups and
Macroeconomics : the part of the economic study that looks at the operation of a nation’s
economy as a whole.
Microeconomics: the part of economic study that looks at the behaviour of people and
organizations in particular models.
Resource Development: the study of how to increase resources and the creation of the
conditions that will make better use of those resources (e.g., recycling).
Invisible Hand: a phrase coined by Adam Smith to describe the process that turns self-
directed gain into social and economic benefits for all.
Capitalism: an economic system in which all or most of the factors of production and
distribution are privately owned and operated for profit.
Supply: the quantity of products that manufacturers or owners are willing to sell at
different prices at specific times.
Demand: the quantity of products that people are willing to buy at different prices at a
specific time.
Market price: the price determined by supply and demand.
Perfect Competition: the market situation in which there are many sellers in a market
and no seller is large enough to dictate the price.
Monopolistic Competition: the market situation in which a large number of sellers
produce products that are very similar but that are perceived by buyers as different.
Oligopoly: a form of competition in which just a few sellers dominate the market.
Monopoly: a market in which there is only one seller for a product or service.
Socialism: an economic system based on the premise that some, if not most, basic
businesses should be owned by the government so that profits can be evenly distributed
among the people.
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