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Economics/Personal Finance > Midterm Exam > Flashcards

Midterm Exam Flashcards

0
Q

In a perfectly competitive market, goods are________ and firms are ______

A

homogenous; price takers

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1
Q

Economic system that exists in the United States

A

mixed

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2
Q

Woman who started first franchise

A

Martha Matilda Harper

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3
Q

an organization owned and operated by members using its services

A

cooperative

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4
Q

a business owned jointly by two or more people

A

partnership

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5
Q

a business enterprise owned jointly by two or more people that exists for a limited amount of time or in order to complete a specific project

A

joint venture

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6
Q

a business that has no more than 100 shareholders and meets strict IRS regulations which allow the taxes to “pass through”

A

S- Corporation

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7
Q

a cost, or disadvantage of ______ is double taxation of the owners

A

C- Corporation

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8
Q

what’s the outcome if the cost of production rises?

A

supply falls

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9
Q

Competition among producers and sellers leads to higher prices while competition among consumers leads to lower prices. TRUE or FALSE?

A

False

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10
Q

Competition led Henry Ford to produce an efficient production system while it lead Apple to produce an efficient delivery system for music. TRUE or FALSE?

A

True

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11
Q

Marginal cost is the cost of producing an additional unit of output. TRUE or FALSE?

A

True

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12
Q

The main motive of a for- profit business organization is to increase its revenue as much as it can. TRUE or FALSE?

A

False

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13
Q

Collusion is illegal even if the product s a necessity such as water or fuels. TRUE or FALSE?

A

True

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14
Q

At a given price, the amount of a good or service that a consumer is willing and able to buy is called…

A

quantity demanded

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15
Q

what is it called when the market demand shifts?

A

change in demand

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16
Q

3 things that create demand in the marketplace

A

consumers/households, businesses, governments

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17
Q

All else being equal, the law of demand tells us that when the price of a good or service decreases, the quantity consumers demand will___

A

increase

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18
Q

what is a shareholder?

A

someone who holds stock in a corporation

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19
Q

What is it called when quantity supplied and quantity demanded are equal?

A

market equillibrium

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20
Q

S.W.O.T

A

strengths
weaknesses
opportunities
threats

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21
Q

When there aren’t many businesses in the competitive market.
Ex. cereal industry

A

oligopoly

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22
Q

When one company dominates the entire competitive market.

Ex. power companies

A

monopoly

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23
Q

A lot of companies are competing against each other, but are creating similar goods.
Ex. fast food resturants

A

monopolistic competition

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24
Q

Business that is owned by a lone individual
Benefits: THE IHO
Costs: limited ways to raise capital, unlimited liability

A

sole- proprietorship

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25
Q

What sets a LLC apart from the rest of the types of businesses?

A

the liability does not apply to personal assets of the individual members

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26
Q

business in which there is a relationship between the owner of a trademark and an individual

A

franchise

27
Q

Cost vs. Price

A

price is how much the consumer pays for a good or service

cost is how much spent on inputs

28
Q

revenue vs. profit

A

revenue is the income generated by the sale of goods and services
profit is how much the producer makes after all the costs are subtracted

29
Q

ratio of total cost or revenue or profit to the number of outputs sold

A

average cost

30
Q

additional cost or change in total cost when adding an extra output

A

marginal cost

31
Q

a good in which all units are the same

A

homogenous good

32
Q

a good that performs a similar function but differs in another area

A

heterogenous goods

33
Q

an individual or company that is not influential enough to affect the price of an item

A

price takers

34
Q

Law of demand states…

A

that everything else being equal, as the price of a good or service increases, the quantity demanded for that good or service increases

35
Q

Determinants of demand

A 
income
tastes and preferences
number of buyers
prices of related good or services
consumer expectations
36
Q

Law of supply states…

A

that if everything else is the same, producers will increase the quantity supplied at higher prices and decrease it at lower prices

37
Q

Determinants of supply

A 
resource prices
production conditions
price of related goods
expectations
number or suppliers
38
Q

what causes changes in the market equilibrium?

A

a surplus or shortage

39
Q

physical capital includes…

A

tools and machines

40
Q

In Adam Smith’s “Wealth of Nations,” he finds that…

A

the role of the govt. should be limited but should provide for public works and protection of private ownership

41
Q

factors of production

A

natural
human
capital

42
Q

Entrepreneurs always accept ___

A

risks

43
Q

Factor demand is a ____

A

derived demand

44
Q

output per worker per unit of time

A

productivity

45
Q

when a country buys goods from another country

A

imports

46
Q

when a country sells goods to another country

A

exports

47
Q

how many hours of labor a firm is willing to hire

A

labor demand

48
Q

Only a few variables such as labor, raw materials and wages can be changed in the ____

A

short run

49
Q

All variables can be changed in the _____

A

long run

50
Q

when both parties are willing and agree to exchange a product for an agreed upon value

A

voluntary exchange

51
Q

The Law of Diminishing Returns states…

A

there is a point where an additional laborer will decrease average production, and that marginal returns can eventually be negative

52
Q

a measure of the production inputs based on the production outputs (vice versa)

A

production function

53
Q

Households want to maximize their ______ and firms want to maximize their _____.

A

utility or satisfaction; profit

54
Q

trade surplus

A

imports < exports

55
Q

trade deficit

A

imports > exports

56
Q

In factor markets, _____ sell factors of production and ____ purchase them.

A

Households; firms

57
Q

Economics is the study of…

A

how goods and services are allocated when dealing with the issue of scarcity

58
Q

shows the maximum combination of two goods that can be produced when all resources and the best technology is used

A

Production Possibilities Frontier

59
Q

What type of market did Milton Friedman think was best?

A

free- market

60
Q

3 basic economic questions

A

What goods and services should be produced?
How much?
For whom?

61
Q

2 assumptions economics makes about peoples behavior

A

people are self- interested

people are rational

62
Q

PACED

A 
define a Problem
list the Alternatives
identify Criteria
Evaluate
make a Decision
63
Q

the degree to which buyers and sellers respond to price change

A

elasticity

64
Q

a legal max on the price at which a good can be sold

A

price ceiling

65
Q

a legal minimum on price at which a good can be sold

A

price floor

Economics/Personal Finance (2 decks)

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