Study Guide Ch. 17, 18, 19

Question 1

Describe monopolies. Why are monopolies illegal?

Answer 1

Monopoly: a company that controls all production of a good or service, one company is the only one selling a product. It is illegal because they can set any price they want

Question 2

Describe and remember the graph of Law of Supply

Answer 2

Businesses will produce more products when, they can sell them at a higher price
S-UP-ply

Question 3

Describe and remember the graph of Law of Demand

Answer 3

Buyers will want more of a product when prices are lower
-D-emand

Question 4

What is the term for the amount of worker output?

Answer 4

Productivity (how much work is getting done)

Question 5

Describe how corporations are owned and organized

Answer 5

separate legal entity, owned by SHAREHOLDERS (STOCKHOLDERS) most large business

Question 6

What does a corporations board of directors do?

Answer 6

Chooses corporate officers (people who will manage the affairs of the corporation) stockholders elect board directors, they represent the stockholders, meets during the year to make decisions about the corporation

Question 7

Describe how owning a stock works

Answer 7

the people who buy stocks own a part of the company and when profits go up, the stockholders earn money but when the business loses profits, stockholders lose money

Question 8

What is a free-enterprise system?

Answer 8

Businesses operate without interference from the government - you can make a huge profit or you can lose it all

Question 9

What are some benefits to a nonprofit organization?

Answer 9

they are not taxed by the government

Question 10

What is the main advantage of a free market economy over a command economy?

Answer 10

Free market economy has businesses that can operate without interference from the government

Question 11

What are all the differences between a command economy and a market economy?

Answer 11

Command: Government makes all economic decisions and owns all business
Market: decisions are made by individuals interests

Question 12

What is the GDP? What is it used for?

Answer 12

GDP (Gross Domestic Product) market value of all goods/services produced annually in US - used to measure how the economy is doing

Question 13

Explain the process of how goods go from a factory to the buyers

Answer 13

Factory sells goods to wholesalers, wholesalers sell good to retailers/stores which then the buyers buy the products from

Question 14

List 4 government agencies that protect the consumers and tell what each one does

Answer 14

Department of Agriculture: provide leadership on food, agriculture, natural resources, nutrition, and related issues based on public policy
Consumer Product Safety: protects the public from unreasonable risks of serious injury or death from types of consumer products under its jurisdiction
Federal Trade Commission: enforces customer protection from unfair businesses practices and unfair methods of competition through law enforcement
Better Business Bureau: helps consumers with unfair business products

Question 15

Describe mass production. What type of power enabled modern mass production?

Answer 15

mass production: developed in the US - uses machines (electrical power) interchangeable parts, assembly line (1st used by Henry Ford)

Question 16

In the US, do more people work making goods or providing services?

Answer 16

providing services

Question 17

What are the different ways you can pay for something? Which is the safest? Which is the riskiest?

Answer 17

cash, debit card, credit card, checks
Safest - Cash
Riskiest - Debit

Question 18

Describe the process in which someone buys and pays for a house

Answer 18

the person can either get a loan from the bank if they have a good credit score, the bank will own part of your house so while your paying off plus interest, they can take your house if you don’t pay, if you buy the house entirely, you own the house and are considered private insurance

Question 19

What do Federal Reserve Bansk do?

Answer 19

makes a policy that a bank can only loan so much money so people don’t run out of money while trying to get the money from the bank

MIGHT NOT BE RIGHT

Question 20

What is the riskiest way to invest your money? What is the safest?

Answer 20

Riskiest - Stocks
Safest - Bonds

Question 21

List the different types of bank accounts and how they work

Answer 21

NOW Accounts : write checks/use debit card and gain interest in the same account
Savings Account: account that is designed to hold your money (in bank) typically pay a interest rate
Money Market Account: a deposit account that pays interest based on money market interest rates
Mutual funds: investments that are similar to a mutual find but do not guarantee a specified amount of interest and not insured by government (MULTIPLE people)
Brokerage Account: an investment account help at licensed brokerage firm

Question 22

List the different types of banks. What does each specialize in? Which is the most common?

Answer 22

Federal Reserve Banks serve the US government
FDIC insures accounts up to $250,000
Commercial Banks: Most common

Question 23

What are three ways the government regulates our economy?

Answer 23

providing loans to businesses, protecting consumers from harmful products, and preventing pollution of the environment

Question 24

What are the key features in mass marketing?

Answer 24

Machines (electrical power) Interchangeable parts, assembly line (1st used by Henry Ford), Advertising