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Econ > exam > Flashcards

exam Flashcards

1
Q

The monetary value of a product.

A

Price

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2
Q

System of allocating goods and services
without prices.

A

Rationing

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3
Q

A fuel created from living materials.

A

Biofuels

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4
Q

A simplified version of a complex behavior expressed in the form of an equation, graph, or illustration

A

Economic Model

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5
Q

Price where quantity supplied equals quantity demanded

A

Equilibrium Price

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6
Q

Quantity of output supplied that is equal to the quantity demanded at the equilibrium price

A

Equilibrium Quantity

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7
Q

Situation where quantity supplied is
greater than quantity demanded at a
given price.

A

Surplus

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8
Q

Situation where quantity supplied is less
than quantity demanded at a given
price.

A

Shortages

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9
Q

The highest legal price that can be
charged for a product.

A

Price ceiling

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10
Q

The lowest legal price that can be paid
for a product.

A

Price floor

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11
Q

Price floor for agricultural products set
by the government to stabilize farm
prices.

A

Target price

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12
Q

loan that carries neither penalty nor
further obligation to repay.

A

Nonrecourse Loan

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13
Q

Unincorporated business owned and run by a single person who has rights to all profits and unlimited liability for all debts of the firm; most common form of business organization in the United States

A

Sole proprietorship

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14
Q

Requirement that an owner is personally
and fully responsible for all losses and
debts of a business.

A

Unlimited liability

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15
Q

Situation in which a firm legally ceases to
exist when an owner dies or quits or a
new owner is added; applies to sole
proprietorships and partnerships.

A

Limited life

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16
Q

Unincorporated business owned and
operated by two or more people who share
the profits and have unlimited liability for the
debts and obligations of the firm.

A

Partnership

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17
Q

Form of business organization recognized by
law as a separate legal entity with all the
rights and responsibilities of an individual,
including the right to buy and sell property,
enter into legal contracts, and to sue and be
sued.

A

Corporation

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18
Q

Check paid to stockholders, usually quarterly, representing a portion of corporate profits

A

Dividend

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18
Q

Certificate of ownership in a corporation; can be either common or preferred stock

A

Stock

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19
Q

requirement in which a corporation, but not its
owners, is responsible for all losses and debts of the business.

A

Limited liability

20
Q

Feature of taxation that allows
stockholders’ dividends to be taxed both
as corporate profit and as personal
income.

A

Double taxation

21
Q

Business investment that involves renting
or leasing another successful business
model.

A

Franchise

22
Q

A measure of business profits determined buy
substracting all expenses, including taxes, from
revenues.

A

Net income

23
Q

Gradual wear on capital goods.

A

Depreciation

24
Q

Total amount of new funds the business
generates from operations; broadest measure
of profits for a firm because it includes both net
income and non-cash charges.

A

Cash flow

25
Q

Combination of firms producing the
same kind of product.

A

Horizontal merger

26
Q

Combination of firms involved in different
steps of manufacturing, marketing, or
sales.

A

Vertical Merger

27
Q

firm with four or more businesses making
unrelated products, with no
single business responsible for a majority of its sales.

A

Conglomerate

28
Q

Economic institution that operates like a
business but does not seek financial gain;
schools, churches, and community-
service organizations are examples.

A

Nonprofit organization

29
Q

Nonprofit association performing some
kind of economic activity for the benefit
of its members.

A

COOPERATIVE/CO-OP

30
Q

Nonprofit service cooperative that
accepts deposits, makes loans, and
provides other financial services.

A

Credit Union

31
Q

Organization that works for its members
interests concerning pay, working hours,
health coverage, fringe benefits, and
other job-related matters.

A

Labor Union

32
Q

In a competitive market economy, prices
are neutral because they favor neither the producer
nor the consumer.

A

Neutrality

33
Q

Prices in a market economy help provide
flexibility. Unforeseen events such as natural disasters
and war affect the prices of many items.

A

Flexibility

34
Q

Most people have known about prices all
their lives. As a result, prices are familiar and easy to
understand.

A

Familiarity

35
Q

Prices have no cost of administration.
Competitive markets tend to help products find their
own prices without outside help or interference.

A

Efficiency

36
Q

Prices help allocate resources
between markets because as prices ___, demand ___

A

increase, lower

37
Q

Surpluses and shortages help establish the

A

equilibrium price and quantity of output.

38
Q

Surpluses cause sellers to ____ while shortages
cause sellers to ____

A

lower prices, raise prices

39
Q

Goals of Price Ceilings

A

To protect buyers from paying overly high prices (price gouging).
To save resources for other needs, such as a war.

40
Q

Goals of price floors

A

To protect business (like farming) during times of difficulty
To stabilize prices and incomes for certain businesses

41
Q

Markets are said to “talk” when prices move up or down significantly in reaction to a related event

A

Gold prices rise
Stock prices fall
Oil prices rise

42
Q

Advantages of Sole Proprietorships

A

Easy to start up
Ease of management
Owner keeps all profits without having to share
Not required to pay separate business income taxes
Psychological satisfaction of being your own boss
Easy to get out of business.

43
Q

Disadvantages of Partnerships

A

General Partnership: each partner is fully responsible
for the acts of all other partners.
Limited Partnership: responsible for the debts of the
business, but limited to his or her investment in the firm.
Limited life
Potential for conflict between partners.

44
Q

A dividend is a what?

A

check that
stockholders receive as a
portion of the corporate earnings

45
Q

Disadvantages of Corporations

A

Double taxation of corporate profits
Difficulty and expense of getting a charter
Owners (shareholders) have little voice in how the
business is run
Subject to more government regulation than other
forms of business.

46
Q

Reasons for merging

A

Faster growth
Synergy
Economies of Scale
Diversification
Elimination of Rivals
Change or lose corporate identity

47
Q

If a multinational makes unrelated products, it is a

A

conglomerate

48
Q

Cooperatives/Co-ops

A

consumer cooperative
Service cooperative
Producer cooperative

Econ (7 decks)

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