The brand of economics that looks at the behaviour of individuals and businesses. In other words, it examines how consumers and businesses react to changes in variables. For example, how do consumers react to price changes and how does quality affect this decision making.
Price Elasticity of Demand (PED) measures how customers change their behaviour when prices change. In other words, it refers to the relationship between price and demand, and how demand reacts when prices change.
A substitute good is a product or service that is used in place of another.
The division of labor refers to the segmentation of tasks, so each person focuses on a specific part of the production process.
When two businesses that are part of the same industry join together to form one company.
Marginal Revenue is the money a firm makes for each additional sale. So if a baker sells an additional loaf of bread for $2, then their marginal revenue is also $2.
A Complementary good is a product or service that adds value to another. In other words, two goods that the consumer uses together. For example, cereal and milk, or a DVD and a DVD player.
Corporate governance is the set of rules and relationships which seek to align the interest of the board of directors, and the businesses owners. As the board of directors may have different interests and incentives from the shareholders, it is important to align these to ensure the longevity of the firm.
A franchise offers the legal ability for a third party to use the franchisee’s name, brand, and products.
Offshoring is where a business moves its operations abroad.
Where prices actively fluctuate based on current demand.
