Term
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Definition
run by one person
most common form of business
most profitable
1/6th of net income |
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Term
| Advantages of sole proprietorship? |
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Definition
easy to start
easy to manage
owner receives all profits
no income taxes
easy to close |
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Term
| Disadvantages of sole proprietorship? |
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Definition
unlimited liability
hard to raise capital
hard to hire qualified employees
limited life |
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Term
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Definition
two or more people owning a business
second smallest proportion of sales and net income
least numerous |
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Term
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Definition
| all partners NOT involved with management |
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Term
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Definition
| spell out how profits will be divided |
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Term
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Definition
business organization recognized by law as a separate legal identity.
government permission to create business with stock rights |
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Term
| Advantages Of Corporations? |
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Definition
easy to raise capital
limited liability
unlimited buisness life
easy to transfer ownership
professionals run buisness |
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Term
| Disadvantages of Corporations? |
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Definition
ownership and management are separate
shareholders have little say
income taxed TWICE
government regulation |
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Term
| what two features make up a complete market? |
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Definition
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Term
| what helps competitive markets reach market equilibrium? |
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Definition
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Term
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Definition
| when supply exceeds demand |
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Term
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Definition
| when demand exceeds supply |
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Term
| what two features help keep prices from changing drastically? |
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Definition
| elastic supply and demand |
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Term
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Definition
represents a set of ideal conditions and outcomes and serves as a model to measure market performance
distributes resources efficently5 |
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Term
| 5 conditions of perfect competition |
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Definition
large # of buyers and sellers
products are identical
buyers and sellers act independently
buyers and sellers are well informed
buyers and sellers are free to enter or leave |
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Term
| How does perfect competition work? |
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Definition
| supply and demand set the equilibrum price and each firm sets a level of output that will maximize its profits at that price |
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Term
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Definition
| lacks one or more of the five conditions of a perfect competition |
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Term
|
Definition
meets all conditions of a perfect competition except identical products
use product differentiation and nonprice competition
sell within a narrow price range but try to raise price to achieve profit maximization |
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Term
| how is the net income calculated? |
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Definition
| total sales - expenses,taxes,depreciation = NET INCOME |
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Term
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Definition
| joining of firms that makes the same product |
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Term
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Definition
| joining of firms involved in different stages of marketing |
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Term
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Definition
| four or more businesses making unrelated products not responsible for majority |
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Term
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Definition
| corporation with manufacturing and service in several countries |
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Term
|
Definition
few large sellers dominate the market
act interdependently by lowering prices after first seller lowers theirs |
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Term
|
Definition
| where businesses all agree to set same prices |
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Term
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Definition
| agreeing to charge a set price above the market |
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Term
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Definition
| one seller of a product dominating the market |
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Term
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Definition
| single firm produces a product because it minimizes overall costs (public utilities) |
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Term
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Definition
| location cannot support two or more business |
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Term
| What are the 4 different types of monopoly? |
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Definition
Natural
Geographical
Technological
Government |
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Term
| What leads to market failure? |
|
Definition
Inadequate competition
Inadequate information
Resource immobility
Externalities
Public goods |
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Term
| What are the 4 different types of market structures? |
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Definition
perfect competition
monopolistic competition
oligopoly
monopoly |
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Term
|
Definition
| nature and degree of competition among firms operating the same industry |
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Term
|
Definition
| unintended side effect either benefit or harm a third party |
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Term
| Why are externalities market failures? |
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Definition
| Beacause the prices buyers and sellers pay do not reflect the costs or benefits |
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Term
| Sherman Anti Trust Act 1890 |
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Definition
| first law against monopolies |
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Term
| Clayton Antitrust Act 1914 |
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Definition
| outlawed price discrimination |
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Term
| Federal Trade Commission 1914 |
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Definition
| to require companies to stop unfair business practices |
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Term
|
Definition
| outlawed special discounts to some customers |
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Term
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Definition
| government support of internet and availability of documents on government websites |
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Term
|
Definition
| costs of production are minimized by single firm |
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Term
|
Definition
| absence of sellers in area |
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Term
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Definition
| based on ownership of manufacturing methods or processes |
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Term
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Definition
| government owns and operates |
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Term
|
Definition
| combination of two or more businesses to form a single firm |
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