Unit 2 Test
Quiz yourself by thinking what should be in
each of the black spaces below before clicking
on it to display the answer.
Help!
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| Four types of markets (most to least competitive) | Perfect competition, Monopolistic competition, Oligopoly, Monopoly
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| Perfect competition | There are many buyers and many sellers that sell identical products
- Sellers are price takers
- Low barriers to entry -> LOTS of competition
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| Monopolistic Competition | There are a large number of sellers offering products that are similar but are distinct from the competition
- Sellers have some control over prices
- Low barriers to entry -> many sellers
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| Oligopoly | There are a few, large sellers offering the same or similar products
- High Barriers to Entry -> low competition
- Sellers have some control over prices
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| Monopoly | There is only ONE seller with a unique product
- The seller is a price setter
- High barriers to entry (very difficult & expensive)
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| Market Power: | The ability of producers to influence prices.
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| Negative Externalities occur when… | production causes a cost to society that is not paid by the producer or consumer
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| Positive Externalities occur when… | production leads to external benefits to outsiders, while the producer and consumer pay all of the costs
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| Public Goods | goods and services that are not provided by the markets because of the difficulty of getting people who use them to pay for their use.
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| What are the 3 main types of business organizations? | Sole proprietorship, Partnership, & Corporation
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| Sole Proprietorship - Advantages | - Easy to start (less paperwork)
- Full decision-making power
- Owner keeps all profits
- Few restrictions
- Easy to close down
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| Sole Proprietorship - Disadvantages | - Unlimited liability
- Limited life: business ends with the owner leaving
- Limited growth potential: less attractive to investors or lenders
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| General Partnership | all owners have unlimited liability
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| Limited Partnership | one general partner and 1+ limited partners w/ limited liability (silent partners who invest $ but don’t actively run the business)
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| Limited Liability Partnership (LLP) | co-owners act like general partners while having the protection of limited liability.
- Used when all partners want an active role in managing the business
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| Partnership - Advantages | - Easy to start (less paperwork)
- Shared decision-making
- Few restrictions
- Specialization by partners
- More growth potential
- Individual taxation (no business taxes)
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| Partnership - Disadvantages | - Unlimited liability for general partners
- Conflict between partners
- Continuity issues - if one partner leaves
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| A corporation is a legal entity with its own separate powers from its owners that are... | - A corporation can enter into contracts, buy and sell property.
- Corporations are owned by shareholders who purchase shares of company stock. Selling stock can bring the company money to grow.
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| Corporation - Advantages | - Limited liability
- Growth Potential
- Professional management
- Long life (As legal entities, corporations have permanence, even after the owner moves on)
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| Corporation - Disadvantages | - More regulation - record keeping and reporting
- Complex start-up - paperwork, rules of governance, stock certificates
- Loss of control - less control for founder(s)
- Double taxation - pay taxes on corporation profits and personal income taxes
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| Unlimited Liability: | owner can be sued for personal assets to cover the debts of the business
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| Limited Liability: | Owner can only lose the money they invested in the business
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| Corporation - Board of Directors: | governing body elected by the shareholders. The board oversees management of the corporation.
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| Corporation - Middle Management. | Includes vice presidents, department heads, and other managers responsible for supervising the day-to-day activities of the firm's workers.
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| Corporation - Corporate officers | senior executives who oversee specific areas of the business.
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| Corporation - CEO (Chief executive officer) | the highest-ranking person in charge of management.
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| Marginal Product: | Addition to Total Product of 1 more worker
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| How to Find: Marginal Product | Difference between each output
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| Total Cost = | variable cost + fixed cost
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| Marginal Cost: | cost for making one more product
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| How to Find: Total Revenue | Total revenue = amount sold x price per unit
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| Marginal Revenue: | extra revenue from selling one more of a product (price)
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| Franchise: | Parent company grants the exclusive rights to sell its products at one location to an independent business
- Franchisee (Business owner) pays an initial fee and a percentage of the profits to the Franchiser (parent company)
-Easily replicated product
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| Multinational Corporations: | a corporation that does business in more than one country
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| Multinational Corporations - Advantages over other firms | - Access to more markets- greater growth potential
- Less likely to go bankrupt than a firm in just one market.
- Access to cheaper labor and raw materials in other countries
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| Nonprofit Organization: | an organization that functions like a business but does not operate to make a profit; they focus on public or private goals- such as human rights, the environment, or medical research
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| Nonprofit - Foundations | created and supported with donations. Support for charitable causes.
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| Nonprofit - Professional Associations | promote interests of people working in a certain profession
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| Nonprofit - Trade Associations | represents the interests of people working in a particular industry.
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| Nonprofit - Business Associations | support the interests of business people in a geographical area
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| Nonprofit - Labor Unions | an organization of workers in a specific industry that seeks to improve working conditions, wages, and benefits
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| Collective bargaining | is a process in which workers, represented by their union, negotiate with employers for better wages and working conditions.
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| Cooperatives | a business organization that is jointly owned and operated by a group of individuals for their mutual benefit
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To hide the entire table, click on the "Hide All" button.
You may also shuffle the rows of the table by clicking on the "Shuffle" button.
Or sort by any of the columns using the down arrow next to any column heading.
If you know all the data on any row, you can temporarily remove it by tapping the trash can to the right of the row.
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