Chapter 7-9 Economics Vocabulary – Flashcards
Unlock all answers in this set
Unlock answersquestion
Perfect Competition
answer
a market structure in which a large number of firms all produce the same product; characteristic-efficient
question
Commodity
answer
a product that is the same no matter who produces it, such as gasoline, notebook, or milk
question
Barrier to Entry
answer
any factor that makes it difficult for a new firm to enter a market
question
Imperfect Competition
answer
a market structure that does not meet the conditions of perfect competition
question
Start-up Costs
answer
the expenses a firm must pay before it can begin to produce and sell goods
question
Government Monopolies
answer
1. Technological Monopolies 2. Fanchise and Licenses 3. Industrial Organizations
question
Forming a monopoly by diff market conditions
answer
1. Economies of Scale 2.Natural Monopolies 3.Technology and change
question
Monopoly
answer
a market dominated by a single seller
question
Economies of Scale
answer
factors that cause a producer's average cost per unit to fall as output rises
question
Natural Monopoly
answer
a market that runs most efficiently when one large firm supplies all the output
question
Government Monopoly
answer
a monopoly created by the government
question
Patent
answer
a license that gives the inventor of a new product the exclusive right to sell it for a certain period of time
question
Franchise
answer
the right to sell a good or service within an exclusive market
question
License
answer
a government issued right to operate a business
question
Price Discrimination
answer
divisions of customers into groups based on how much they will pay for a good
question
Market Power
answer
the ability of a company to change prices and output like a monopolist
question
Monopolistic Competition
answer
a market structure in which many companies sell products that are similar but not identical
question
Collusion
answer
an agreement among firms to divide the market, set prices, or limit production
question
Differentiation
answer
making a product different from other similar products
question
Nonprice Competition
answer
a way to attract customers through style, service, or location, but not a lower price
question
Oligopoly
answer
a market structure in which a few large firms dominate a market
question
Price War
answer
a series of competitive price cuts that lowers the market price below the cost of production
question
Price Fixing
answer
an agreement among firms to charge one price for the same good
question
Cartel
answer
a formal organization of producers that agree to coordinate prices and production
question
Predatory Pricing
answer
selling a product below cost to drive competitors out of the market
question
Antitrust Laws
answer
laws that encourage competition in the market
question
Trust
answer
like a cartel, an illegal grouping of companies that discourages competition
question
Merger
answer
combination of two or more companies into a single firm
question
Deregulation
answer
the removal of some government controls over a market;used to promote competition
question
Four Conditions of Monopolistic Competition
answer
1.Many Firms 2.Few Artificial Barriers to Entry 3. Slight Control over Price 4. Differentiated Products
question
Four ways firms to improve their sales wihtout touching the price
answer
1. Characteristics of Goods 2. Location of Sale 3.Service Level 4. Advertising Image
question
Prices
answer
prices will be higher than they would be in perfect competition, because firms have a small amount of power to raise prices
question
Profits
answer
while monopolistaclly competitive firms can earn profits in the short run, they have to work hard to keep their product distinct enough to stay ahead of their rivals
question
Cost and Variety
answer
;
question
Antitrust laws Examples:
answer
1. Regulating Business Pratices 2.Breaking Up Monopolies 3.Blocking Mergers 4. Preserving Incentives
question
Four conditions for perfect competition; a perfectly competitive market
answer
1.Many buyers and sellers 2.Identical Products 3.Informed buyers and sellers 4.Free market Entry and Exit
question
Technology
answer
some markets require high degree of technological know-how. As a result, now entrepreneurs cannot easily enter these markets
question
Bussiness Organization
answer
an establishment formed to carry on commercial enterprise
question
Sole proprietorship
answer
a bussiness owend and managed by a single individual; earns all of firms's profits and is responsible for all of the firms's debt
question
Advantages of Sole Proprietorship
answer
ease of start-up, relatively few regulations, sole receiver of profit, full control, ease to discontinue
question
Steps to start a new business: SP
answer
1. Authorization;business license 2.Site permit 3. Business name
question
Business License
answer
authorization to start a business issued by the local gov.
question
Zoning Laws
answer
Law in a city or town that designates sepearate areas for residency and for business(prohibit sole propietors from operating business outised of the house)
question
Liability
answer
the legally bound obligation to pay debts
question
Disadvanteges of Sole propietorship
answer
unlimited personal liability, limited access to resources, lack of permanence
question
Fringe benefits
answer
payments other than wages or salaries
question
Partnership
answer
a business organization owned by two or more persons who agree on a specific division of responsibilitites and profits
question
General partnership
answer
partnership in which partners share equally in both responsibility and liability
question
Limited partnership
answer
partnership in which only one partner is required to be a general partner; other partner only gives money-- the only thing they lose is their original investment; advantage of being the general partner is control of business
question
Limited Liability partnership LLP
answer
partnership in which all partners are limited partners; all partners are limited from personal liablity in certain situations
question
Advanteges of partnership
answer
ease of start-up, shared decision-making and specialization, larger pool of capital, taxation
question
Disadvantages of partnerships
answer
unlimited liability, potential for conflict
question
articles of partnership
answer
a partnership agreement; spells out each partners rights and responsibilities, outline how partners will share profits or losses
question
Uniform partnership act UPA
answer
act ordering common ownership interest, profit and loss sharing, and shared management responsibilities in a partnership
question
Assets
answer
money and other valuables belonging to an individual or business
question
Corporation
answer
a legal entity owned by individual stockholders
question
Stock
answer
a certificate of ownership in a corporation
question
Closely held corporation
answer
corporation that issues stock to only a few people, often family members, aka privately held corporation
question
Publicly held corporation
answer
corporation that sells stock on the open market
question
Advantages of incorporation
answer
limited liablity for owners, trasferable ownership, ability to attract capital, long life
question
Advantages for stockholders
answer
limited liability, flexibility, stocks can be sold
question
Advantages for the corporation
answer
more potential for growth, can sell bonds, can hire experts, long life, stock is transferable
question
Bond
answer
a formal contract to repay borrowed money with interest at fixed intervals
question
Certificate of incorporation
answer
license to form a corporation issued by the state gov
question
Double taxation
answer
corporations must pay taxes for income
question
Dividend
answer
the portion of corporate profits paid out to stockholders; must pay personal income tax on these
question
Horizontal merger
answer
the combination of two or more firms competing in the same market with the same good or service
question
Vertical merger
answer
the combination of two or more firms involved in a diff stages of producing the same good or service
question
Conglomerate
answer
business combination merging more than three businesses that make unrelated products
question
Multinational corporation MNC
answer
lasrge corporation that produces and sells its goods and services throughout the world
question
Business franchise
answer
a semi-independent business that pays fees to a parent company in return for the exclusive right to sell a certain product or service in a given area
question
Royalty
answer
share of earnings given as payment
question
Cooperative
answer
a business organization owned and operated by a group of individuals for their mutual benefit
question
Consumer cooperatives
answer
retail outlet owned and operated by consumers
question
Service cooperatives
answer
cooperative that provides a service, rather than a good
question
Producer sooperatives
answer
ag. marketing cooperative that helps member sell their products
question
nonprofit organization
answer
instituion that functions much like a business, but does not operate for the purpose of generating profits
question
professional organization
answer
nonprofit organization that works to improve the images, working conditions, and skill levels of ppl on particular occupations
question
Business association
answer
nonprofit organization that promotes collective business interest for a city, state etc,
question
trade associations
answer
nonprofit organizations that promotes the interest of a particular industry
question
Labor Force
answer
all nonmilitary people who are employed or unemployed
question
Learning Effect
answer
the theory that education increases productivity and results in higher wages
question
Screening Effect
answer
the theory that the completion of college indicates to employers that a job applicant is intelligent and hard-working
question
Contigent Employment
answer
a temporary or part-time job
question
Derived Demand
answer
demand that is determined by demand for another good or service
question
Productivity
answer
value of output
question
Equilibrium wage
answer
the wage rate that produces neither an excess supply of workers nor an excess demand for workers in the labor market
question
Unskilled Labor
answer
labor that requires no specialized skills, education, or training
question
Semi-skilled Labor
answer
labor that requires minimal specialized skills and education
question
Skilled Labor
answer
labor that requires specialized skills and training
question
Professional Labor
answer
Labor that requires advanced skills and education
question
Glass Ceiling
answer
an unoffcial, invisible, barrier that prevents women and minorities from advancing in businesses dominated by white men
question
Labor Union
answer
an organization of workers that tries to improve working conditions, wages, and benefits for its members
question
Featherbedding
answer
the practice of negotiating labor contracts that keep unnecessary workers on a company's payroll
question
Strike
answer
an organized work stoppage intended to force an employer to address union demands
question
Right-to-work Law
answer
a measure that bans mandatory union membership
question
Blue-collar Worker
answer
someone who works in an industrial job, often in manufacturing, and who receives wages
question
White-collar Worker
answer
someone in a professional or clerical job who usually earns a salary
question
Collective bargaining
answer
the process in which union and company representatives meet to negotiate a new labor contract
question
Mediation
answer
a settlement technique in which a neutral mediator meets with each side to try to find a solution that both sides will accept
question
Arbitration
answer
a settlement technique in which a third party reviews the case and imposes a decision that is legally binding for both sides
