Chapter 3 & 4

Question 1

Economics

Answer 1

Making choices and satisfying the wants and needs of consumers.

Question 2

Command Economy

Answer 2

The government determines what, what, how, and for whom goods and services are produced.

Question 3

Scarcity

Answer 3

Occurs because people’s wants and needs are unlimited while the resources need to produce goods and services are limited.

Question 4

Supply

Answer 4

How much of a good or service a producer is willing and able to produce at different prices.

Question 5

Fixed cost

Answer 5

Costs that must be paid no matter how much of a good or service is produced.

Question 6

Demand

Answer 6

An individuals need or desire for a product or service at a given price.

Question 7

Market economy

Answer 7

Individuals decide what, how, and form whom good or service is produced.

Question 8

Opportunity fees

Answer 8

The value of the next best alternative.

Question 9

Variable cost

Answer 9

Cost that go up and down depending on the quantity of the good or service

Question 10

Imports

Answer 10

Products and Services that are brought in from another country to be sold.

Question 11

Royalty fees

Answer 11

Weekly or monthly payments made by the franchisee to the franchisor.

Question 12

Sole Proprietorship

Answer 12

A business owned by only one person.

Question 13

Board of directors

Answer 13

Group people who meet several times a year to make important decisions affecting the company.

Question 14

Share of stock

Answer 14

A unit of ownership in a corporation.

Question 15

Business broker

Answer 15

A person who sells a business.

Question 16

Initial franchise fee

Answer 16

Fee the franchisee pays for the right to run a franchise

Question 17

Partnership

Answer 17

A business owned by 2 or more people.

Question 18

Dividends

Answer 18

Payments of profits to shareholders by corporations.

Question 19

Franchise

Answer 19

A legal agreement that gives a person the right to sell a company’s products or services n a particular area.

Question 20

Corporation

Answer 20

A Business with the legal rights of a person and which may be owned by many people.

Question 21

What happens to a price when there is a monopoly?

Answer 21

The company can raise prices higher due to no competition.

Question 22

Why are businesses with mostly fixed costs at higher risk?

Answer 22

They have to pay even if they don’t make all the money -leading to debt or less profit.

Question 23

3 ways the government affect the production of goods and services in the US economy

Answer 23

1. Purchases
2. Taxes
3. Subsides

Question 24

Why do franchisors offer training to the franchisee?

Answer 24

To ensure the quality of products and services

Question 25

Why do owners of a sole proprietorship face more risk than owners of partnerships or corporations?

Answer 25

Sole Propertership
     - Difficult to raise money
     - Personal assets used if don't pay
Partnership
     - Owned by more people
     - Don't need t come up with all the money

Question 26

3 p’s

Answer 26

Product
Place
Price
Promotions

Question 27

Product

Answer 27

goods or services offered to customers

Question 28

Place

Answer 28

place and method used to get products and services to customers

Question 29

Price

Answer 29

amount customers pay for products and services

Question 30

Promotions

Answer 30

how product information is communicated to customers

Question 31

Decisions made by the board of directors

Answer 31

• Board of directors is responsible for electing the corporation’s senior officers and determining their salaries
• Company’s officers, not the board of directors, is responsible for the day-to-day management
• Board of directors set the corporation’s rules for conducting business
• Board of directors decides how much the corporations should pay in dividends